ONGC signs pact with IndianOil for petrochemicals

The largest oil refining and gasoline marketing corporation in the country, Indian Oil Corporation (IOC), and ONGC, India's top oil and natural gas producer, have agreed to explore potential petrochemicals business opportunities. IOC and Oil and Natural Gas Corporation (ONGC) "signed a memorandum of understanding (MoU) to explore downstream opportunities, especially in petrochemicals, both greenfield projects and through acquisitions," ONGC stated.

ONGC already has two downstream petrochemical plants through subsidiaries. ONGC generates two-thirds of the country's oil, which is refined into fuels like petrol and diesel, and more than half of the petrol, which is used to make fertilisers and converted into CNG. Oil firms all over the world are redefining themselves as nations move away from polluting fossil fuels and towards low-carbon sources of energy like hydrogen and the use of electricity to power automobiles.

The existing process of refining crude oil at refineries to create fuel and diesel will be replaced by the direct conversion of crude oil into petrochemicals, which serve as the building blocks for a variety of plastics, paints, detergents and tyres. Given that India's per capita consumption was significantly lower than the global average, the country's petrochemical demand is expected to increase dramatically. At a conference last month, India's oil minister, Hardeep Singh Puri, predicted that the country's chemical business will increase from USD 178 billion to USD 300 billion over the next ten years.

The Press Information Bureau (PIB) on May 19, India is predicted to contribute more than 10% of the global increase in petrochemicals. Most of IOC's refineries currently have petrochemical plants, and the company has enormous plans to expand the industry. According to the photo shared by ONGC of the signing ceremony, the MoU was signed by ONGC Executive Director for New Ventures Deb Adhikari and IOC Executive Director for Petrochemicals Arvindar Singh Sahney. 

A petrochemical facility is run by Mangalore Refinery and Petrochemicals Ltd (MPRL), a subsidiary of ONGC, in the state of Karnataka. Gujarat is home to its other subsidiary's facility. According to reports, the company is considering spending Rs 1 lakh crore by 2030 to increase its capacity for producing petrochemicals. The government's overarching goal is to establish India as a significant petrochemical hub on a worldwide scale.

By 2030, the production capacity of ONGC's joint venture ONGC Petro additions Ltd (OPaL) and its subsidiary MRPL would have doubled to 8 million tonnes per year. Unknown is if the current Memorandum of Understanding will result in IOC joining those projects or if the deal is merely for the exploration of brand-new initiatives.