ONGC inks deal for very large ethane carriers in petrochemicals push

State-run ONGC has signed an agreement with Japan’s Mitsui O.S.K. Lines (MOL) to build, own and operate two Very Large Ethane Carriers (VLECs), as the E&P major expands into oil-to-chemicals business as part of its diversification strategy.

“In a landmark move, ONGC has signed a Heads of Agreement with Japan’s MOL on July 3, 2025 to build, own and operate two VLECs, redefining how India powers its petrochemical future. These mega vessels will deliver imported ethane to ONGC Petro Additions (OPaL), ensuring a steady, self-reliant supply of feedstock for cutting-edge petrochemical production,” it said.

This global partnership marks a bold step in ONGC’s downstream expansion, combining innovation, scale and energy security like never before. This is not just a collaboration. It’s ONGC charting the course for the next era of energy, the exploration & production (E&P) major said.

VLECs are specialised ships that transport ethane, a key petrochemical feedstock. Ethane is largely used as a petrochemical feedstock to manufacture ethylene, which is used in making packaging films, wire coatings, squeeze bottles, plastics and synthetic rubber products.

Oil-to-chemicals

In February 2025, ONGC’s Director (Strategy & Corporate Affairs), Arunangshu Sarkar told businessline that the CPSU aims to evolve into an integrated energy solutions conglomerate with interests across E&P, oil-to-chemicals, renewables and natural gas (regasified LNG). Oil-to-chemicals business will form its third revenue stream.

In August last year, the government approved ONGC’s additional investment in OPaL, which includes an equity investment of ₹10,501 crore. ONGC’s stake in its petrochemical subsidiary is now at 95.69 per cent.

Situated at Dahej (Gujarat), OPaL has a world-class petrochemical complex having the largest standalone dual feed cracker in South-East Asia.

Commissioned in 2017, the petrochemical complex has a capacity to produce 1.5 million tonnes per annum (mtpa) of polymers and 0.5 mtpa of chemicals. With 12 per cent market share, OPaL has a good presence in India’s polymer segment, ONGC said in August 2024.

Government’ increasing ONGC’s equity stake in OPaL helps in rectifying the latter’s capital structure with a healthy Debt Equity ratio. ONGC’s cumulative investment in OPaL now stands at ₹22,728 crore.

Government’s approval also assures a sustained supply of gaseous feed to OPaL by ONGC from its new gas from nomination fields at a premium of up to 20 per cent over administered price mechanism (APM) gas price.

Published on July 4, 2025