MOSCOW (MRC) -- GAIL (India) Ltd, the country's top gas supplier, plans to build a USD4.89-B ethane cracker near its liquefied natural gas (LNG) import plant in Western India, two sources with direct knowledge of the matter said, as it seeks to meet an expected surge in demand, said Hydrocarbonprocessing.
Indian companies are boosting their petrochemical production capacity as the expanding economy boosts the need for goods ranging from plastics to paints and adhesives. A cracker produces ethylene, required for products such as plastics.
Demand for petrochemicals could nearly triple by 2040, according to estimates by top refiner Indian Oil, forcing companies to make big investments to set up new facilities across the country.
GAIL is looking for land in the coastal region of Dabhol in Maharashtra state for the 1.5 million tons a year (mtpa) cracker project, one of the sources told Reuters. GAIL operates a 5 mtpa LNG plant at Dabhol. The company plans to import ethane from the United States for the project, the source said.
GAIL's communications office did not immediately respond to a request for comment. "We are trying to sort out challenges around acquiring land, most likely, in or around Dabhol ... we are hoping to receive financial support from the state government," the source said.
GAIL is also exploring the possibility to acquire land in Madhya Pradesh, which neighbors Maharashtra, if a deal in Dabhol doesn't materialize, the person said. The proposed dual-feed cracker will also have capability to crack up to 40% liquefied petroleum gas (LPG), enabling the option to switch to less expensive feedstock to maximize margins.
India's per capita petrochemical consumption is about one-third of the global average. Asia's third-largest economy annually consumes 25 million to 30 million tons of petrochemicals.
We remind, GAIL Gas Limited is also steering its pricing mechanism in line with the Government of India's guideline to pass on new domestic gas pricing benefits to its customers and has announced a substantial reduction in prices with effect from 9th April 2023. GAIL Gas Limited has announced a reduction in its Domestic PNG prices by Rs. 7 per SCM in Bengaluru and Dakshin Kannada and Rs. 6 per SCM in all its other Geographical areas. The new effective Domestic PNG Prices is Rs 52.50 per SCM in Dewas, Meerut, Sonipat, Taj Trapezium Zone, Raisen, Mirzapur, Dhanbad, Adityapur and Rourkela and Rs 51.50 per SCM for Bengaluru & Dakshin Kannada.