Petrochemical push: ONGC partners with Japan’s Mitsui to build VLECs for Dahej plant; feedstock imports to begin mid-2028

Oil and Natural Gas Corporation (ONGC) has partnered with Japanese shipping firm Mitsui OSK Lines to operate two very large ethane carriers (VLECs) that will import petrochemical feedstock for its subsidiary, ONGC Petro Additions Ltd (OPaL), according to sources.As per news agency PTI, ONGC and Mitsui have agreed to build, own and operate the specialised carriers, estimated to cost around $370 million for the pair. The vessels will be constructed at Korean shipyards and are expected to be ready in about two-and-a-half years, enabling ethane imports from mid-2028.Two sources with direct knowledge were quoted as saying by PTI that Mitsui is likely to hold a majority stake in the joint venture, though the equity structure would depend on ONGC’s investment appetite. The ONGC board is expected to take a final call on the partnership arrangement.The ethane imports are intended to secure feedstock for OPaL’s Dahej facility in Gujarat, which houses Southeast Asia’s largest standalone dual-feed cracker. ONGC had earlier set up a C2 (ethane) and C3 (propane) extraction unit at Dahej in 2008-09 at a cost of about Rs 1,500 crore, while OPaL’s petrochemical complex came online in 2017.The move comes as ONGC prepares for a change in supply terms under its long-term LNG contract with Qatar. India currently imports 7.5 million tonnes per annum of LNG from Qatar, of which 5 million tonnes contains methane, ethane and propane. However, the revised deal signed last year, effective 2028, will supply only ‘lean’ gas stripped of ethane and propane, PTI reported.To bridge this gap, ONGC plans to source and supply 800,000 tonnes of ethane annually to OPaL from May 2028. The company will handle sourcing, while the Mitsui joint venture will own the carriers and lease them to ONGC for shipping the fuel.Mitsui already operates LNG and ethane carriers for Indian firms, including four LNG ships for Petronet LNG Ltd and six ethane carriers for Reliance Industries Ltd.