The new facility is expected to help Gail meet the robust domestic petrochemicals demand, which is expected to nearly triple to USD 1trillion by 2040.
Ethane is a component of natural gas. An ethane cracker breaks down ethane into ethylene, which is the key chemical input for making plastics, adhesives, synthetic rubber, and other petrochemicals. "Gail is very bullish on the petrochemicals segment. This new facility is still in the planning stage and will almost double Gail's existing 810 KTA (thousand tonnes per annum)petrochemicals facility in Pata near Kanpur, UP," said an official aware of the development.
State-run Engineers India Ltd is working on the detailed feasibility report for the project. "The facility will likely come up in the next 5-6 years." Gail did not respond to ET's mailed query until the publication of this report.
Last February, Gail said it wants to import ethane, as a petrochemical feedstock, from ethane-surplus countries and transport it through Gail's pipeline systems to demand centers.
This March, the company signed a tripartite memorandum of understanding (MoU) with Oil and Natural Gas Corporation (ONGC) and Shell Energy India to explore opportunities for the import of ethane and other hydrocarbons. The MoU would also examine the development of evacuation infrastructure at Shell Energy Terminal, Hazira.
RIL Sole Importer
Currently, Reliance Industries, the country's most-valued company, is the only Indian entity that is importing 1.5 million tonnes per annum of ethane for its ethane crackers in Dahej and Hazira in Gujarat and Nagothane in Maharashtra.
Traditionally, petrochemical players have been using naphtha as a primary feedstock, but demand for ethane has been picking up over the past few years. Cracking ethane can yield over 80% ethylene against 30% yielded by cracking naphtha.
India annually consumes 25 to 30 million tonnes of petrochemicals. Its per capita consumption is about a third of the global average. Anticipating that India's annual petrochemical consumption could nearly triple to 80 million tonnes by 2040, Indian refiners are boosting their petrochemical production capacity.
State-controlled refiner Bharat Petroleum Corp is also investing close to USD 6 billion to develop an ethane-fed cracker at its 156,000 barrels per day Bina refinery in Madhya Pradesh.
"Gail was earlier planning to set up this new facility in Maharashtra's Aurangabad or Dabhol near its 5 mt per year liquefied natural gas plant, but later decided on Madhya Pradesh," said the second official.
Gail is also diversifying its petrochemicals business by entering the polypropylene business.
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