GAIL to expand petrochem business

State-run GAIL will focus on expanding its petrochemicals business and will raise the capacity of its plant in Pata, in the Auraiya district of Uttar Pradesh, Chairman and Managing Director, U.D. Choubey said.


"We have decided to expand the Pata plant capacity to 500,000 tonne per annum by installing a sixth furnace at the gas cracker unit with an estimated investment of around Rs 1 billion," Choubey said in an interview.

After the completion of its 100,000 tonne per year new high-density polyethylene plant late last year, the polymer production capacity of the Pata plant is currently at 410,000 tonne.

The cracker plant's ethylene output is likely to go up to 440,000 tonne in another six months utilising 10 per cent more than the designed capacity due to the installation of the fifth furnace, Choubey said.

Choubey said the US-based process licensor, Stone & Webster has suggested that installation of a sixth furnace was necessary for debottlenecking the plant capacity to 500,000 tonne.

GAIL also plans to increase its share in the lucrative petrochemical business, which contributed nearly 32 per cent to its bottomline in the financial year ended March, Choubey said. During 2007-2008, GAIL's polymer production rose 9 per cent to 386,000 tonne as against 354,000 tonne in the previous year.

Polymer sales increased 13 per cent to 391,000 tonne from 347,000 tonne year ago. GAIL also plans to set up two mega petrochemical plants, one each in India and overseas.

Choubey said the company has zeroed in on five options for the overseas plant, Qatar, Iran, Algeria, Nigeria and Russia.

Choubey had earlier said the company along with Reliance Industries is pitching for a mega petrochemical plant in Qatar, at an estimated investment of around $1.2 billion.

In India, he said the company is planning a 1-million tonne petrochemical unit at Visakhapatnam through a five-way joint venture. The other joint venture partners in the project are Hindustan Petroleum, Oil India, Mittal Energy and French oil major Total.

He said GAIL was also seeking equity participation in the proposed $7.5 billion Iran-Pakistan-India gas pipeline project, as it will give the company exposure in trans-national pipeline projects.

A special purpose vehicle is likely to be set up for building the gas pipeline from the Iran-Pakistan border to the Pakistan-India border. Iran has already started construction of the pipeline within its territory.

The 2,100 km pipeline tri-nation will originate in Iran's port city of Assaluyeh and pass through that country (1,340 km) and Pakistan before reaching the Indian border.

GAIL's equity participation in the pipeline will bring in transparency in the transportation tariff of the gas and also give the company experience of engagement in trans-national projects, Choubey said.

GAIL is looking to participate in other international pipeline projects like the $13 billion Trans-Saharan gas pipeline which would supply gas from Africa to the European market.