Date:24/08/2005 URL: http://www.thehindubusinessline.com/2005/08/24/stories/2005082402750200.htm

Back Feasibility study on Iran gas cracker unit expected by Jan

Richa Mishra

New Delhi , Aug. 23

GAIL (India) Ltd, which is considering setting up a one-million-tonne gas cracker unit in Iran in collaboration with National Petrochemical Company of Iran, is hopeful of completing the detailed feasibility study on the project by January 2006.

According to a senior GAIL executive, the company is also likely to set up a joint venture for the project by early next year.

This detailed feasibility study has been undertaken based on the preliminary report submitted by Engineers India Ltd. Subsequent to the detailed feasibility study, the joint venture will be formed, a GAIL executive told Business Line. The project is to be completed in three to four years after the joint venture is set up, he said.

GAIL has been actively considering expanding beyond natural gas transmission business into petrochemicals, power, liquefied natural gas, exploration and production and compressed natural gas in India and abroad.

In the gas cracker venture, GAIL proposes to have a 50-per cent stake, and the rest will be with National Petrochemical Company, the executive said.

On the investments the project would require, the GAIL executive said it is expected to cost between Rs 7,000 crore and Rs 8,000 crore. Of this, GAIL may make an investment of about Rs 1,200 crore.

On whether GAIL would bring in the products for sale in the domestic market, the executive said this would be subject to the overall market requirements.

The GAIL-National Petrochemical Company combine would mainly focus on gas cracker. The cracker will manufacture low-density polyethylene, linear low-density polyethylene and high-density polyethylene. The main attraction of the project is the low cost feedstock that will be available from the South Pars gas fields in Iran.

GAIL and National Petrochemical Company are also open to considering other options such as methanol plants and styrene butadiene rubber plants in the long run. The companies have also agreed to consider and evaluate other opportunities such as a methanol plant in the South Pars zone and its extension to an olefin plant.

The $2.5-billion National Petrochemical Company is one of the largest producers of a variety of petrochemical products with a capacity of 18.5 million tonnes per annum (mtpa). It is targeting a capacity of 40 mtpa and a turnover of $20 billion by 2015.