09 February 2009 08:24 [Source: ICIS news]
MUMBAI (ICIS news)--India’s ONGC Petro-additions Ltd (OPaL) is working on starting commercial production at its 1.1m tonnes/year cracker and derivatives complex in Dahej, Gujarat by December 2012, said a senior company executive late last week.
“We have awarded a contract for the cracker. Technical bids for the derivative units are due to be opened on 16 February and selection is planned in March. An engineering, procurement and construction contract (EPC) will be awarded thereafter. We have also awarded the project management contract (PMC) to Engineers India Limited,” said PK Johri, CEO of OPaL, on the sidelines of the PlastIndia 2009 exhibition and conference in
Units downstream of the cracker include a 1.08m tonne/year high density polyethylene (HDPE) and linear low density PE (LLDPE) plant, a 360,000tonne/year polypropylene (PP) plant, a 95,000tonne/year butadiene unit, a 135,000tonne/year benzene line and a 34,000tonne/year butene 1 plant.
“We will build a swing HDPE/LLDPE plant with two lines, each of 540,000tonnes/year,” said Johri. The company had initially planned a swing unit of 740,000tonnes/year and a 300,000 tonne/year dedicated HDPE plant.
“But we have now decided to have a swing plant with higher capacity. We could in the future look at a dedicated HDPE plant,” added Johri.
Based on the current cracker configuration, 1.1m tonnes of ethylene and 300,000 tonnes of propylene will be produced annually. The cracker would be based on ethane, propane, butane and naphtha supplied by ONGC, which has a 26% stake in OPaL.
Johri was confident that the company would be able to meet the targeted start up date despite recent delays.
The project, spearheaded by ONGC, has been in the pipeline for a few years now and was first targeted for completion in 2010. But it was delayed back to 2012 as ONGC could not complete selection of a strategic partner.
The plan to get an international strategic partner has not been abandoned, said Johri.
Gail was initially offered a 9% stake in OPaL but the company has requested for its holding to be raised to 19%, said Johri. A decision on this will be taken soon, he added.
“Of the remaining 50%, 25% would be offered to a strategic partner while 25% would be offered to the public through an initial public offering (IPO),” he added.
The nearly $3.0bn project would have a debt equity ratio of 70:30 and this has already been sanctioned by the lead banker State Bank of India (SBI), said Johri.
As the project is coming up in a special economic zone, OPaL faces a fairly high export commitment.
“We will have to be a net foreign exchange earner for the first five years of operation. So approximately 60% of production is likely to be exported,” he said.
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