State-run GAIL on Monday said it has urged the Madhya Pradesh government to provide enablers for setting up of India’s largest ethane cracker unit, which will likely entail an investment of around ₹60,000 crore.
The country’s largest gas utility intends to set up a 1,500-kilo tonnes per annum (KTPA) ethane cracker project, along with a greenfield petrochemicals complex, at Ashta tehsil of Sehore district in the State. Ethane is used to produce plastics, anti-freeze and detergents.
“GAIL has submitted its request to the Madhya Pradesh government for providing suitable enablers for the project. Around 800 hectares of land shall be provided by the MP Industrial Development Corporation, for which the State government has already initiated the process,” the Maharatna company said in a filing on BSE.
The investment approval from GAIL’s Board shall be sought after a favourable outcome on enablers. The mode of financing is yet to be decided, it added.
Earlier this month, the MP government approved the project, which is expected to generate 15,000 jobs during the construction period and about 5,600 during the operation period. A 70-hectare township is also proposed in the project. The ground breaking ceremony is expected by February 2025 and commercial production likely in FY31.
At present, GAIL has a petrochemicals capacity of 8,10,280 tonnes.
Petrochemicals push
Indian oil and gas companies such as GAIL are expanding their petrochemicals business in a bid to create more revenue lines. Besides, the demand for petrochemicals is increasing in the country led by expanding industrial, construction and manufacturing segments.
For instance, GAIL, ONGC and Shell Energy India signed a tripartite Memorandum of Understanding (MoU) to explore opportunities for import of ethane and other hydrocarbons and development of evacuation infrastructure at Shell Energy Terminal, Hazira in March this year.
Similarly, GAIL spent 30 per cent of its total capex of ₹11,426 crore in FY24 on petrochemicals. In FY25, it has again projected a capex of around ₹11,500 crore out of which ₹5,200 crore, or roughly 45 per cent, will be on petrochemicals.
Besides, GAIL Mangalore Petrochemicals plant, which was acquired through the NCLT process (erstwhile JBF Petrochemicals), is expected to be completed by March 2025. The plant’s capacity is 1,250 KTPA.
Its ongoing projects also include petrochemical capacities of 610 KTPA at Usar (Maharashtra) and Pata.
Ethane is used mainly as a feedstock in the petrochemical industry to produce ethylene for making plastics and resins. Ethane and steam are fed into an ethylene cracker that heats the mixture to break down the ethane molecule to produce ethylene, and some other co-products.
In Asia and Europe, naphtha serves as the primary petrochemical feedstock, but demand for ethylene is outpacing demand for other co-products, reducing the appeal of naphtha cracking.
Cracking ethane can yield more than 80 per cent ethylene; cracking naphtha can yield as little as 30 per cent ethylene. Ethane’s growth as an ethylene feedstock is attributable to its low relative cost, high ethylene yield, and low number of co-products.