Indian Oil Corp plans to set up plant in USA to benefit from cheap shale gas

16-Apr-15

In a bid to take advantage of the shale gas and oil boom in USA, Indian Oil Corporation Ltd (IOCL) is reportedly mulling an entry into petrochemical manufacturing there. “The company is interested in downstream petrochemical plant in the US and is holding exploratory talks with companies who are in process of setting up crackers or petrochemical units,” said an IOCL official , as per business-standard.com. IOCL is keen on having a stake in an upcoming project, which is still in the planning or is yet to reach financial closure stage. The finalisation of the deal is still a long way and will mostly fructify only after the 2016 presidential election in the US, where gas exports policy has divided the industry. While energy companies want no control on the exports of shale gas, the chemical & petrochemicals companies (which can use gas to make petrochemical products) have urged the government to put some curb on the exports. Indian Oil already has a presence in the US shale market through its 10% stake in Carrizo’s liquid rich shale assets in the Niobrara basin in Colorado. iOCL’s plan (to set up a petrochemical plant) will signify a major shift in the Indian hydrocarbon sector, where most of the companies have been scouting for procuring low-cost shale gas from the US rather than setting up downstream unit in the US. If IOCL finalises its US petrochemical unit plans, it will join a list of overseas companies who have announced huge investments in downstream petrochemical industry in the US due to the availability of low-cost feedstock (or starting material) ie shale oil & gas.