28 August 2012 09:54 [Source: ICIS news]
KOLKATA (ICIS)--ONGC Ltd hopes to secure investment from Saudi Arabian petrochemical giant SABIC for its $3.83bn (€3.06bn) project at Dahej in India’s Gujarat state under the banner of ONGC Petro-additions Ltd (OPaL), an official from the Indian oil exploration and production major said on Tuesday.
“A proposal for SABIC’s participation in the OPaL project has been forwarded through [the] Indian Ministry of Petroleum to the Saudi Arabian government on a bilateral basis,” the official said.
“An equity investor in OPaL has become necessary to bridge the funding gap in the project in the project,” he added.
OPaL needs investors that can shoulder 53.5% of the increased funding requirement for the project, which is due for commercial production in December 2013.
The project in Dahej includes a cracker with a 1.1m tonne/year ethylene capacity, a 340,000 tonne/year high density PE (HDPE) unit, two swing HDPE/linear low density PE (LLDPE) lines with a capacity of 360,000 tonnes/year each and a 340,000 tonne/year polypropylene plant.
ONGC has the biggest stake in OPaL at 26%, while oil and gas transportation firm GAIL India Ltd has a 15.5% interest and Gujarat State Petroleum Corp (GSPC) owns 5% of the project.
GAIL has decided early this month to cap its equity contribution to the project at around $200,000. This meant that its stake in the project will fall to 15.5%, instead of the 19% based on the original project cost of $3.50bn.
Based on the higher project cost of $3.83bn and a debt-to-equity ratio of 70:30, promoters of the project will have to chip in $1.15bn in equity, up from $1.05bn, previously.
Seeking SABIC’s participation in the Dahej petrochemical project is part of the Indian government’s initiative in February this year for greater investments of Saudi companies in the Indian oil and petroleum sectors, an official at the Indian Ministry of Petroleum and Natural Gas said.
A project-specific investment proposal was forwarded to SABIC for OPaL, the ministry official said.
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Others in the list include Indian Oil Corp’s (IOC) LNG project at Ennore, Bharat Petroleum Corp’s (BPCL) LNG terminal at Kochi, Hindustan Petroleum Corp’s (HPCL) grass-root refinery in
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