State-run GAIL (India) will see its petrochemical capacity nearly double to 1.7 mln tpa in the second quarter of FY16, with the commissioning of two greenfield projects, as per Financial Express. Currently, the PSU produces high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE). For the expansion, the company proposes to increase capacity of the Pata plant, near Kanpur to 900,000 tpa. Also, the greenfield projects promoted by GAIL through Brahmaputra Cracker and Polymer Ltd (BCPL) (with ONGC Petro-additions as partner) is near completion. A GAIL official, however, told FE: “The robust growth in the petrochemicals business in India provides an opportunity for the company to expand its petrochemical business further. Over the last 15 years, GAIL has emerged as one of the leading petrochemical companies with a pan-India marketing network.”
The additional capacities are being added despite some analysts expressing the view that the PSU’s petchem units, which are being fed by an expensive feedstock (imported LNG), could face pressure on margins, especially given the intense competition from Reliance Industries. The pressure on margins have started showing after long-term LNG supplies from Qatar has become expensive compared with spot buys, forcing India to cut supplies by 30-35% from Doha. The equation has altered since mid-2014 when prices of commodities started to fall, pushing crude oil prices to a six-year low and, with it, the prices of gas. While supplies from RasGas cost about US$11-12/million British thermal units (mBtu), spot prices are hovering around US$8-9/mBtu
10-Aug-15 
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