GAIL on Schedule with Pata Petrochemicals Expansion Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's state-run gas utility company, Gail (India) Limited (BSE:532155) (New Delhi), is in the process of implementing expansion plans that include projects spread across its existing and upcoming plants.

The plans include increasing the production capacity of its existing gas-based petrochemical plant in Pata in the Auraiya district of Uttar Pradesh with an investment of $139 million. The current capacity of the polymer line is 410,000 tons per year, and with the completion of the first phase of the expansion plans, the capacity will increase to 500,000 tons per year. The foundation stone of a sixth furnace to the gas-cracker unit was laid recently. This is part of the first phase of the project and involves an investment of about $21 million. The production capacity of the whole complex will reach 800,000 tons per year with the completion of the expansion project.

The new high-density polyethylene (HDPE) Unit 2 was commissioned in December 2007. The unit is based on the CX Technology of Mitsui Chemicals Incorporated (TYO:4183) (Tokyo, Japan) and has been designed to produce 100,000 tons per year of HDPE. The existing HDPE unit also has a capacity of 100,000 tons per year. The existing 310,000-ton-per-year linear low-density polyethylene (LLDPE)/HDPE swing unit produces a wide range of LLDPE and HDPE grades. The unit is based on technology from Nova Chemicals Corporation (NYSE:NCX) (Calgary, Alberta). The gas cracker is based on technology from Stone & Webster, part of The Shaw Group's (NYSE:SGR) (Baton Rouge, Louisiana) energy and chemicals division. The unit has the capacity to produce 410,000 tons per year of ethylene.

In a joint venture with Total S.A. (NYSE:TOT) (Paris), Hindustan Petroleum Corporation Limited (BSE:500104) (Mumbai), Mittal Energy (Singapore), and Oil India Limited (New Delhi), GAIL is considering setting up a 15 million-ton-per-year export-oriented refinery and a 1million-ton-per-year petrochemical unit at a greenfield refinery and petrochemical complex in Visakhapatnam, Andhra Pradesh. The preliminary memorandum of understanding was signed in October 2007.

The pre-feasibility study of the $6 billion project is currently under way, and the project structure and refinery configuration report is expected to be completed by November. The study will estimate the demand for petroleum products in India and other parts of Asia. It is also studying the economies of the project, including issues of taxation. The project structure and the equity structure will be decided by the Steering Committee, representing all the partners, by the end of December, after the pre-feasibility report is complete. The capacity of the refinery may be brought down to 14 million tons per year to make it more feasible and to avoid any bottlenecks. The project is expected to take five years, from the date of start of construction, to be completed. The project will initially focus on the export market but may eventually cater to the domestic market.

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