New Delhi: GAIL (India) Ltd, the top gas supplier in India, is planning to construct a $4.89 billion ethane cracker near its liquefied natural gas (LNG) import plant in western India to meet the expected surge in demand, according to sources familiar with the matter. As the Indian economy expands, the demand for petrochemicals is also expected to grow, requiring the expansion of production capacity for goods like plastics, paints, and adhesives. A cracker produces ethylene, which is needed to create such products.

Indian Oil, the top refiner, estimates that demand for petrochemicals could nearly triple by 2040, necessitating significant investments in new facilities throughout the country. GAIL is looking for land in the coastal region of Dabhol in Maharashtra state for the 1.5 million tonnes per year cracker project, which would require importing ethane from the United States.

GAIL is working on the challenges of acquiring land in or around Dabhol and is hoping to receive financial support from the state government. However, if a deal in Dabhol doesn’t materialise, the company is also exploring the possibility of acquiring land in Madhya Pradesh, which neighbours Maharashtra.

The proposed dual-feed cracker will also have the capability to crack up to 40% liquefied petroleum gas (LPG), allowing for the possibility of switching to a less expensive feedstock to maximise margins. India’s per capita petrochemical consumption is approximately one-third of the global average. The economy consumes 25 to 30 million tonnes of petrochemicals annually, making it Asia’s third-largest consumer.

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