An alliance between Reliance Industries and Gail has been formalised with the signing of an MoU for cooperation in petrochemical projects outside India.
The two companies will scout for opportunities and set up a working group to explore naphtha or gas-based investments in the Middle East, Russia and the former Soviet Union. A special purpose vehicle will be formed for investments.
Recently, Gail was said to be looking at an investment in Qatar with Qapco reportedly working out details of an ethane-based 1.9m tonnes/year complex.
Interestingly, the MoU also talks of the companies examining the possibility of mutual co-operation in the domestic market.
While Reliance (including IPCL) has a number of products in its portfolio Gail is active only in hdPE and lldPE. The only other Indian producer of these polymers is Haldia Petrochemicals.
Indian polymer processors have for long complained about the lack of competition in local polymer supplies. If Gail and Reliance join hands the options would be further reduced until new projects by Indian Oil Corp and others are completed.