In a strategic move to secure critical raw material supplies, India's Oil and Natural Gas Corporation (ONGC) is entering the specialized business of ethane transportation through a joint venture with a Japanese shipping major.
Equal Partnership for Specialized Ships
ONGC will acquire a 50% stake in two separate joint venture companies with Japan's Mitsui OSK Lines (MOL). Each company will own one Very Large Ethane Carrier (VLEC), with the partners holding equal equity. The total investment for the two vessels is estimated at approximately $370 million.
The joint venture entities, named Bharat Ethane One IFSC and Bharat Ethane Two IFSC, will be registered at the GIFT City in Gujarat. ONGC's investment involves subscribing to 200,000 equity shares of Rs 100 each in both companies. MOL will bring its operational expertise to the table by managing the Indian-flagged vessels.
Securing Feedstock for Petrochemical Growth
The primary mission of this new fleet is to transport ethane from the United States to ONGC's petrochemical subsidiary, ONGC Petro Additions Ltd (OPaL). Operations are scheduled to commence from mid-2028.
This initiative is a direct response to changing global energy dynamics. Qatar, a traditional supplier, is expected to start exporting 'lean' gas, which contains lower volumes of ethane and propane. To counter this, ONGC plans to import around 800,000 tonnes of ethane annually from 2028 to meet OPaL's feedstock requirements.
OPaL operates India's largest dual-feed cracker at Dahej, which can process both naphtha and gaseous feedstocks like ethane. This new supply chain will enhance its operational flexibility and security.
Combining Strengths for a Robust Supply Chain
The partnership leverages the core strengths of both corporations. MOL brings extensive shipping experience, currently operating Liquefied Natural Gas (LNG) vessels for Petronet LNG and ethane carriers for Reliance Industries in India. ONGC contributes its sourcing capabilities and market presence.
The two new VLECs will be constructed at shipyards in South Korea. This venture follows ONGC's earlier investment of Rs 1,500 crore in a gas extraction plant at Dahej, which has a capacity to process 4.9 million tonnes of LNG per year.
By vertically integrating its supply chain, ONGC aims to build a more resilient and cost-effective model for its expanding petrochemical business, ensuring a steady flow of essential feedstock for the long term.
