Samsung and Linde Secure $1.43 Billion of EPC Contracts for Indian Petrochemicals Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--ONGC Petro Additions Limited (OPAL) (Dahej, Gujarat), a subsidiary of state-owned Oil & Natural Gas Corporation Limited (BOM:500312) (ONGC) (New Delhi), recently awarded contracts valued at $1.43 billion to a consortium of Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea), an engineering, procurement and construction (EPC) firm, and Linde AG (FRA:LIN) (Munich, Germany), an industrial engineering firm, for the construction of a dual-feed ethylene cracker unit and auxiliary facilities at the proposed petrochemicals complex in the Dahej Special Economic Zone in Gujarat.

Samsung's order, valued at $960 million, involves engineering, procurement, construction and assembly of the plant. Linde's contract, valued at $470 million, covers implementation of the unit, including supply of the steam cracker technology and engineering and provision of critical components.

The two firms will set up the ethylene cracker unit, which has a production capacity of 1.1 million tons per year of ethylene and 340,000 tons per year of propylene. The unit will be India's first dual-feed ethylene cracker to be based on naphtha and gas and also constitutes the single largest component of ONGC's mega-petrochemicals project at Dahej. The project is slated for completion by July 2012.

ONGC's $2.8 billion project will be based on a dual supply of gas and naphtha. The proposed facility will process gas imported by Petronet LNG Limited (BOM:532522) (New Delhi) to extract ethane and propane for further use to manufacture polymers. Naphtha, another key raw material for the manufacture of petrochemicals, will be sourced from ONGC's processing plants at Hazira and Uran. ONGC's upcoming C2-C3 extraction plant at Dahej will be integrated with the proposed petrochemicals complex.

The petrochemicals complex will have a production capacity of 1.1 million tons per year of ethylene, 400,000 tons per year of propylene, 150,000 tons per year of benzene, and 115,000 tons per year of butadiene. All of these products find application as raw materials in the plastics industry. The project, which is also the largest plant contract to date in India's hydrocarbon sector, is slated for commissioning by December 2012. GAIL India Limited (BOM:532155) (New Delhi), one of the largest gas utilities in the country, has expressed an interest in picking up a 19% stake in the project.

OPAL is a special purpose vehicle set up by ONGC and Gujarat State Petroleum Corporation Limited (Gandhinagar, Gujarat), a state-owned oil and gas firm, for the Dahej petrochemicals project. ONGC holds a stake of 26% in OPAL while GSPC holds a stake of 5%.

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