In a strategic move to secure petrochemical feedstock for its subsidiary, India’s state-owned Oil and Natural Gas Corporation (ONGC) has partnered with Japanese shipping giant Mitsui O.S.K. Lines to build and operate two very large ethane carriers (VLECs). The collaboration, aimed at importing ethane for ONGC Petro Additions Ltd’s (OPaL) Dahej facility in Gujarat, marks a significant step in ensuring a steady supply of raw materials for India’s petrochemical industry.
Sources with direct knowledge of the matter reveal that ONGC and Mitsui are finalizing the equity structure of the joint venture, with Mitsui likely to hold a majority stake in the VLECs, which are estimated to cost $370 million to construct at Korean shipyards. The exact ownership split will depend on ONGC’s investment appetite, but the partnership leverages Mitsui’s expertise in operating specialized vessels. The Japanese firm already manages four liquefied natural gas (LNG) ships for Petronet LNG Ltd., India’s largest LNG importer, and six ethane carriers for Reliance Industries Ltd.
The VLECs, expected to be operational by mid-2028, will transport 800,000 tonnes per annum of ethane to OPaL’s mega petrochemical complex in Dahej, which houses Southeast Asia’s largest standalone dual-feed cracker. The facility relies on a mix of naphtha, ethane (C2), propane (C3), and butane (C4) to produce high-density polyethylene (HDPE), linear low-density polyethylene (LLDPE), polypropylene (PP), and styrene-butadiene rubber. The ethane imports are critical to compensate for changes in India’s LNG supply from Qatar, which currently amounts to 7.5 million tonnes annually.
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Under the existing agreement, QatarEnergy supplies 5 million tonnes of LNG yearly, containing methane, ethane, and propane, with the remainder provided on a best-effort basis. However, a revised contract signed last year will shift to “lean” gas—stripped of ethane and propane—starting in 2028. This change prompted ONGC to invest Rs 1,500 crore in a C2/C3 extraction plant at Dahej, operational since 2008-09, to process LNG for OPaL. Until OPaL’s petrochemical plant was commissioned in 2017, ONGC sold extracted C2/C3 compounds to Reliance Industries’ Indian Petrochemicals Corporation Ltd (IPCL).
With the new LNG composition, ONGC is now turning to direct ethane imports to meet OPaL’s feedstock needs. The Dahej facility’s C2/C3 plant can handle 4.9 million tonnes of LNG annually, while OPaL’s cracker has a 1.1 million-tonne ethylene capacity, supporting its polymer production. The VLECs, which will take approximately two and a half years to build, will be hired by ONGC from the joint venture to ship ethane sourced by the company starting in May 2028.
The ONGC board is yet to finalize the partnership details, but the venture underscores India’s growing focus on securing energy and petrochemical resources. The collaboration with Mitsui, a seasoned player in LNG and ethane shipping, positions ONGC to strengthen its supply chain for OPaL, which plays a pivotal role in India’s petrochemical sector. The Dahej complex, with its advanced dual-feed cracker and associated polymer units, is a cornerstone of ONGC’s strategy to expand its downstream operations.
This partnership also highlights the evolving dynamics of India’s energy imports. As the country transitions to leaner LNG supplies, investments in specialized infrastructure like VLECs are crucial to maintaining the competitiveness of its petrochemical industry. The move is expected to bolster OPaL’s production capabilities, ensuring a steady supply of high-value polymers for domestic and international markets.
As discussions on the joint venture progress, industry observers anticipate that the Mitsui-ONGC collaboration will set a precedent for future partnerships in India’s energy sector. With construction timelines set and the first ethane shipments targeted for mid-2028, the initiative promises to enhance India’s self-reliance in petrochemical feedstocks while deepening ties with global shipping leaders like Mitsui.
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