ONGC Initiates Global Tender for Stake Sale in Petrochemical Subsidiary OPaL
State-run Oil and Natural Gas Corporation (ONGC) is set to launch a global tender to divest a portion of its stake in its petrochemical subsidiary, ONGC Petro additions Limited (OPaL). This strategic move aims to attract international investors and restructure the company back into a joint venture framework.
Strategic Divestment and Government Mandate
According to Arunangshu Sarkar, Director of Strategy & Corporate Affairs at ONGC, the corporation has been directed to dilute its stake in OPaL and revert it to a joint venture structure through a global tender. "We are looking for partners. We hope to come out with a global expression of interest (EoI)," Sarkar stated during the India Energy Week 2026 event in Panaji. While the exact quantum of shares to be offloaded remains unspecified, this initiative aligns with the government's broader asset monetization requirements.
Currently, ONGC holds a dominant 95.69% stake in OPaL, with GAIL India Ltd owning approximately 4% and Gujarat State Petroleum Corporation holding the remaining shares. The proposed stake sale is part of efforts to unlock value and enhance operational efficiencies within the public sector enterprise.
Financial Restructuring and Operational Boost
In August 2024, the Union government approved a comprehensive capital infusion of ₹18,365 crore into OPaL to address its financial challenges. This package included:
- Additional equity capital up to ₹10,501 crore
- Conversion of compulsorily convertible debentures (CCDs) worth ₹7,778 crore
- Balance payment of ₹86 crore for share warrants
ONGC's annual report for FY25 highlighted that this restructuring was crucial for stabilizing OPaL's finances and facilitating its exit from the Special Economic Zone (SEZ) area. To further ensure feedstock stability, the Centre has allocated up to 3.2 million standard cubic meters per day of gas from new wells, reducing reliance on volatile LNG markets.
Performance and Market Context
OPaL demonstrated robust performance in FY25, with petrochemical product sales increasing to 1,785 kilo tonnes from 1,769 kilo tonnes in the previous fiscal. Revenue from operations climbed to ₹14,804 crore, up from ₹14,307 crore in FY24. Meanwhile, another ONGC subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL), achieved a record throughput of 18.04 million tonnes, operating at 120% capacity.
The annual report emphasized that these downstream entities enhance ONGC's vertical integration and provide a financial hedge against upstream volatility, contributing to sustained group-level stability. As global energy markets evolve, the chemicals and petrochemicals sector is poised to drive substantial demand within the oil industry over the next decade.
India's Petrochemical Ambitions
With global demand for traditional fuels like petrol and diesel expected to weaken, India aims to position itself as a petrochemical hub for global consumption. Petrochemicals are critical in manufacturing plastics, synthetic fibres, fertilizers, paints, solvents, cosmetics, and pharmaceuticals.
Industry reports underscore India's growing significance in this sector:
- A CareEdge Ratings report in December projected a robust 6-7% annual growth for India's domestic petrochemical sector in the medium term, driven by economic expansion and steady downstream demand.
- An S&P Global report in October identified India as a key demand driver for global petrochemical producers, despite challenges such as slowing consumer demand, tariff uncertainties, tighter margins, and overcapacity.
However, the report also noted that while India's appetite for petrochemicals remains the strongest in Asia, domestic producers face competition from cheaper imports. To maintain a stronghold, Indian chemical producers are diversifying into specialty chemicals and pursuing upstream and downstream integration.
OPaL, incorporated in 2006 as a petrochemical greenfield project in the Dahej SEZ, exited the SEZ in March 2025. This divestment initiative marks a pivotal step in ONGC's strategy to optimize its portfolio and capitalize on India's emerging petrochemical potential.
