India offers stake to Kuwait in ONGC and IOC’s petrochemical plants

01-Apr-10

India has offered Kuwait a stake in Oil and Natural Gas Corp's (ONGC) Rs 12440 crore petrochemical plant at Dahej in Gujarat on the West coast and Indian Oil Corp´s (IOC) proposed chemical plant at Paradip on the East coast. Kuwait Petroleum Corp has repeatedly rebuffed offers for stake in Indian refinery projects since its demand for auto fuel distribution rights is not possible, due to India’s policy that only state-owned firms qualify for government subsidies. However, Kuwait has indicated a willingness to discuss the opportunity further after a recent offer by India’s Petroleum Minister to his Kuwati counterpart. ONGC’s Dahej petrochemical complex is to comprise capacity to produce 1.1 mln tpa ethylene, 340,000 tpa propylene, 135,000 tpa benzene and 95,000 tpa butadiene. C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) will be used as feedstock. ONGC holds 26% ONGC Petro-additions (OPaL), the special purpose vehicle (SPV) formed for setting up the chemical complex, 5% is held by Gujarat State Petroleum Corp (GSPC) and 19% is held by GAIL India. The scope for a foreign partner will be for 20-25% stake holding. ONGC is keen to get an overseas major who can either bring technology or marketing support for its Dahej plant to be built by February 2012. KPC has also been offered a stake in the 1 mln ton petrochemical plant that was split from the Rs 29,777-crore refinery at Paradip for building in future. The plant is planned to be build after the 15 mln tpa refinery is commissioned in 2012 as IOC is currently faced with a cash crunch in view of selling subsidised fuel. IOC has been exploring equity partnership with Saudi Aramco and Kuwait Petroleum capable of supplying crude oil to the Paradip refinery project, but the two have declined. Hence the petrochemical plant is now being offered. Kuwait supplies 10% of India's current crude needs. India is counting on Kuwait and other oil-rich nations in the Gulf to meet crude oil requirements of new refineries that are set to increase India's refining capacity by 70 mln tons to 250 mln tons by 2012.