By Mohi Narayan
NEW DELHI, May 10 (Reuters) - GAIL (India) Ltd , the country's top gas supplier, plans to build a
400-billion rupee ($4.89 billion) ethane cracker near its
liquefied natural gas (LNG) import plant in Western India, two
sources with direct knowledge of the matter said, as it seeks to
meet an expected surge in demand.
Indian companies are boosting their petrochemical production
capacity as the expanding economy boosts the need for goods
ranging from plastics to paints and adhesives. A cracker
produces ethylene, required for products such as plastics.
Demand for petrochemicals could nearly triple by 2040,
according to estimates by top refiner Indian Oil, forcing
companies to make big investments to set up new facilities
across the country.
GAIL is looking for land in the coastal region of Dabhol in
Maharashtra state for the 1.5 million tonnes a year (mtpa)
cracker project, one of the sources told Reuters. GAIL operates
a 5 mtpa LNG plant at Dabhol.
The company plans to import ethane from the United States
for the project, the source said.
GAIL's communications office did not immediately respond to
a request for comment.
"We are trying to sort out challenges around acquiring land,
most likely, in or around Dabhol ... we are hoping to receive
financial support from the state government," the source said.
GAIL is also exploring the possibility to acquire land in
Madhya Pradesh, which neighbours Maharashtra, if a deal in
Dabhol doesn't materialise, the person said.
The proposed dual-feed cracker will also have capability to
crack up to 40% liquefied petroleum gas (LPG), enabling the
option to switch to less expensive feedstock to maximise
margins.
India's per capita petrochemical consumption is about
one-third of the global average. Asia's third-largest economy
annually consumes 25 million to 30 million tonnes of
petrochemicals.
($1 = 81.7800 Indian rupees)
(Reporting by Mohi Narayan; Editing by Sharon Singleton)
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