India’s NSL group proposes fertilizer unit JV with ONGC

19 June 2012 08:36  [Source: ICIS news]

KOLKATA (ICIS)--India’s NSL group proposes to set up a $1bn (€790m) gas-based fertilizer project in north-eastern province of Tripura in collaboration with state-owned ONGC Limited, a company official said on Tuesday.

NSL has submitted a project proposal to both the provincial government of Tripura as well as Indian exploration and production (E&P) major, ONGC for a collaboration that would leverage latter’s newly discovered Khobal gas field in the region, the official said.

Earlier this year, ONGC Limited had floated a notice inviting expression of interest (EoI) from domestic and international fertiliser producers seeking collaboration for a joint venture to leverage its gas assets in Tripura.

ONGC has already announced setting up a gas-based urea production facility in Tripura entailing an investment of $970m and drawn up plans for a second plant in view of new gas discovery and urea shortage in the region.

A NSL-ONGC collaboration for the fertilizer project will be subject to appraisal and due diligence by ONGC and approvals from the provincial government.

However, NSL will also consider going it alone with the project in case a joint venture does not materialise, the company official said.

ONGC has 11 gas fields in Tripura and produced 643.9 million metric standard cubic metres  (mmscm) of gas in 2011-12.

The company’s exploratory Khobal gas field has reported to have 95% methane content and though field development plans were yet to be put in place, exploratory wells have tentatively indicated gas flow of 150,000 cubic metre per day.

According to government data, Indian domestic demand for urea was pegged at 30m tonne per year against a domestic production of 21m tonne per year with the balance being met through imports.

The government has set a target of creating an additional 10m tonne per year urea production capacity by 2016 and hence ONGC’s focus on leveraging its gas assets in north eastern Indian to diversify into fertilizer.

The NSL group headquartered in Hyderabad in southern India started as a seeds company with current businesses encompassing agricultural inputs, fertilizer, sugar and power sectors.

($1 = €0.79)

By: Ajoy K Das
+65 6780 4359

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