Shaw Group to Provide Basic Engineering and Technology Services for GAIL India's Ethylene Complex in Uttar Pradesh

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Researched by Industrial Info Resources (Sugar Land, Texas)--GAIL (India) Limited (BSE:532155) (New Delhi) has selected The Shaw Group Incorporated (NYSE:SHAW) (Baton Rouge, Louisiana) to provide technology and basic engineering services for the company's proposed 450,000-ton-per-year ethylene production facility at the Pata petrochemicals complex in Uttar Pradesh. In the 1990s, the Shaw Group executed a similar contract to build GAIL's first ethylene plant at the same site, which has a production capacity of 400,000 tons per year.

According to Lou Pucher, the president of the Shaw Group's energy and chemicals business, the proposed ethylene manufacturing facility, which will be an addition to the existing plant, will provide the company with huge savings in operating and energy costs. In March, GAIL announced plans to undertake feasibility studies to double the capacity at the Pata refinery and petrochemicals complex from 410,000 tons per year to 800,000 tons per year. The capacity augmentation was part of the Indian government's plan to bridge the growing demand-supply gap in the petrochemical and refining sectors.

In 1999, GAIL began operations of the Pata petrochemicals facility with a nameplate capacity of 260,000 tons per year of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE). The Pata facility is the only plant in North India producing LLDPE and HDPE. As a result, GAIL enjoys a large market share in the region.

Recently, GAIL, which markets HDPE and LLDPE under the brand names G-Lex and G-Lene, augmented production capacity at Pata to 410,000 tons per year. Presently, the facility consists of one LLDPE train with a capacity of 210,000 tons per year and two HDPE trains, each with a capacity of 100,000 tons per year. While Mitsui & Company Limited (NASDAQ:MITSY) (Tokyo, Japan) provided its patented slurry technology for HDPE production. The LLDPE trains are based on Novacor technology.

GAIL has also announced its decision to invest $174 million over the next three years on exploration, production and other expansion projects. In association with Engineers India Limited (BSE:532178) (EIL) (New Delhi), which is also providing the engineering and construction services for the expansion project at Pata, the company is exploring opportunities in Turkmenistan. While EIL is keen to participate in the Chardzou refinery augmentation project, GAIL is holding discussions with Turkmengaz (Ashgabat, Turkmenistan) to seek exploration, production and pipeline and gas distribution licenses in the country.

The Shaw Group provides engineering, technology and construction services to leading companies in the refining, energy, infrastructure, and petrochemicals sectors. Recently, the company secured a contract to provide project management services for the refinery developed by Dogu Akdeniz Petrokimya ve Rafineri Sanayi ve Ticaret A.S. (DAPRAS) (Ankara, Turkey), an affiliate of Calik Enerji A.S. (Ankara, Turkey). The refinery, which will be located at Yumurtalik, will have a production capacity of 212,000 barrels per day. The feed for this project will come from Russia, the Caspian Sea and Iraq.

In August, the company signed an agreement with the Abu Dhabi Oil Refining Company (TAKREER) (Abu Dhabi, United Arab Emirates) to provide engineering, procurement and construction (EPC) services for a base oil facility located in Ruwais Industrial City. The facility, which will have a capacity of 600,000 tons per year, will manufacture 100,000 tons per year of base-II oils and 500,000 tons per year of base-III oils. These products are used extensively as engine-lubricant blends in automobiles.

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