MOSCOW (MRC) -- Oil and Natural Gas Corp. (ONGC) has shelved its stake sale plans for ONGC Petro Additions Ltd (OPaL) unable to attract a strategic partner, reported Livemint.
OPaL, a joint venture between ONGC (49.4%), GAIL (India) Ltd (49.2%) and Gujarat State Petroleum Corp. Ltd (1.4%), has set up a grass root mega petrochemical complex at Dahej, Gujarat.
For over four years, ONGC has maintained that it was in talks with Saudi Arabia’s Saudi Basic Industries Corp. (Sabic) and Saudi Aramco for selling a 26% stake in OPaL.
If ONGC converts share warrants worth Rs 2,600 crore (USD363 million) into equity, its share in the project could rise to 70%. Besides, if it also decides to convert debentures worth Rs 7,778 crore (USD1.08 billion) into equity, its share could rise to about 93%. After turning OPaL into a subsidiary, ONGC could consider listing it in two years.
OPaL is a USD4.5 billion petrochemical project. It began operations in 2016-17 and has been ramping up production in phases. OPaL’s complex houses India’s largest greenfield single-location, dual-feed cracker unit. The company primarily manufactures polymer, a chemical compound used in various products ranging from textiles to plastics.
A senior ONGC official said: "Offtake from OPaL is increasing and, even if OPaL is technically a separate entity, all feedstock is taken from ONGC. We see the contribution from petrochemicals to increase (in ONGC’s topline) and, thus, we may convert OPaL into a subsidiary."
Though OPaL was meant to export most of its products, it is currently exporting less than 15%. So, considering the increased domestic demand, ONGC had said in October that it was working towards getting the domestic tariff area (DTA) access against its present Special Economic Zone (SEZ) tag.
Petrochemicals make up nearly 30% of India’s chemicals industry. An increase in plastic consumption has led to domestic demand rising at a compound annual growth rate (CAGR) of 8-9% over the past decade.
OPaL operates a 1.1m tonne/year ethylene cracker, two 360,000 tonne/year linear low density PE (LLDPE)/high density PE (HDPE) swing units, a 340,000 tonne/year HDPE plant and a 340,000 tonne/year polypropylene line at Dahej, in India’s western state of Gujarat.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
OPaL is a joint venture between Gujarat State Petroleum Corp (GSPC), Gas Authority of India Ltd (GAIL) and ONGC.
MRC