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GAIL to Invest 60,000 Cr. in Greenfield Ethane Cracking Unit in MP

GAIL Gas Authority of India logo

Gas Authority of India Ltd. (GAIL), a Maharatna oil & gas Public Sector Undertaking (PSU), is planning to set up a greenfield Ethane cracking unit in Madhya Pradesh’s Sehore. The estimated investment in this project will be about Rs. 60,000 crore.

This information was conveyed by the company via a stock filing dated 10th June 2024.

GAIL’s Planned 1,500 KTPA Ethane Cracker Unit to Manufacture Ethylene Derivatives

GAIL’s envisaged Ethane cracking unit at Ashta, Sehore will have a capacity of 1,500 Kilo Tonne Per Annum (KTPA). This plant will crack ethane, which is found in natural gas, to produce ethylene derivatives. Cracking refers to using heat in order to break the chemical bonds in ethane gas to produce ethylene. Ethylene gas is usually processed into a resin, which is further used to produce plastics such as High-Density Poly Ethylene (HDPE) and Linear Low-Density Poly Ethylene (LLDPE).

Plant Planned to Come Up in 800 Hectare, Request Submitted to MP Govt.

GAIL has submitted its request to the Madhya Pradesh government for providing ‘suitable enablers’ for the planned Ethane cracking unit. Further, GAIL mentioned that MP Industrial Development Corporation Limited will be providing it about 800 hectare of land for the project, and that MP government has initiated the process for the same.

GAIL clarified that its Board is yet to accord investment approval for this project. The mode of financing has also not been decided for the Sehore Ethane cracker.

Sehore Plant to be a Significant Addition to GAIL’s Petrochem Portfolio

GAIL expects this plant to help grow its petrochemical business and has stated the same as its rationale behind setting up this plant. Further, once commissioned, this will be one of GAIL’s largest petrochemical facilities in terms of capacity.

Major Facilities in GAIL’s Existing Petrochem Portfolio

Currently, GAIL’s most extensive petrochemical complex is situated in Pata, near Uttar Pradesh’s Kanpur, which has a collective capacity of 810 KTPA (both HDPE and LLDPE taken together).

Additionally, GAIL holds 70% equity in Brahmaputra Cracker & Polymer Limited (BCPL), a joint venture which can produce 280 KTPA of polymers at its plant in Dibrugarh, Assam. The remaining 30% in BCPL is equally held by Oil India Ltd. (OIL), Numaligarh Refinery Ltd. and the Govt. of Assam.

GAIL also owns 49.21% stake in ONGC Petro Additions Ltd. (OpaL), which has 1,400 KTPA of polymer production capacity.

Planned Ethane Cracker in Line with GAIL’s Petrochem Goals

In its Annual Report for 2022-23, GAIL had mentioned its 2025 target to have a ‘polymer marketing portfolio’ of 1.65 MTPA (1,650 KTPA). GAIL owns the marketing rights for polymers produced at Pata and Dibrugarh, which takes its current polymer marketing portfolio to 1,090 KTPA. Therefore, if realised, Sehore Ethane cracking unit and the associated polymer manufacturing unit will be in line with GAIL’s vision of expanding its Petrochemical portfolio.