July 5, 2008

Gail Plans Petrochem Unit in Qatar

By Sanjay Dutta

MADRID: Flagship gas utility Gail has zeroed in on gas-rich Qatar for a mega petrochemicals complex the state-owned company proposes to build in partnership with Mukesh Ambani's Reliance Industries Ltd, India's biggest corporate by market capitalization, at an investment of over $1.3 billion.

"A joint delegation will visit Qatar on July 7 to discuss setting up a mega petrochemical plant in that country," Gail chairman U D Choubey told TOI on the sidelines of the 19th World Petroleum Congress here. His company had last year signed a memorandum of understanding to jointly set up a mega gas-based petrochemicals plant designed with two million tonnes capacity.

The two companies had identified 10 countries where enough gas was available for using as raw material for making petrochemicals. These countries included Qatar, Abu Dhabi, Bahrain, Vietnam, Australia, South Africa, Angola, Mexico and Russia for the plant. "We have now zeored in on Qatar, Iran, Algeria, Nigeria and Russia," Choubey said.

Petrochemicals accounted for 32% of Gail's profit in 2007-08 and is expected to add 40% to the net this year. No wonder, Gail is also showing interest in setting up a petrochemicals unit in Iran and will be shortly sending a formal proposal to National Petrochemical Company of Iran. "We discussed the issue with Iran's oil minister Gholam-Hossein Nozari here and they have welcomed Gail's proposal. For Iran too, we have proposed that Gail and the Indian private firm jointly set up the chemical plant."

Choubey said he proposed to Nozari to set up city gas distribution and CNG (compressed natural gas) networks in Iran. Chinese firms have shown interest in assisting Iran in setting up 1,400 CNG outlets there. Both the proposals have been welcomed by Iran and formal business discussions are expected to start shortly.

Reliance and Gail believe that there is a huge demand for petrochemicals products worldwide. This would need new capacities and, therefore, opportunity of setting up global size petrochemical complexes, preferably gas-based, in gas-rich countries is being explored, Choubey said.

"Petrochemicals is our second most important business after natural gas. We are raising capacity of our Pata petrochemicals plant to 440,000 tonnes in the next six months (from 410,000 tonnes) and want to set up two mega units - one in India and one abroad," Choubey said.

The Indian unit is being planned at Vizag in Andhra Pradesh in a five-way joint venture with Total of France, Hindustan Petroleum, Mittal Energy, Oil India and Gail. The five are exploring possibilities of setting up a 15 million tonne export-oriented refinery together with a one million tonne petrochemicals plant at Vizag.

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