Reliance, GAIL for setting up petrochem unit in Qatar

By Ammar Zaidi

Madrid, July 3 (PTI) Reliance Industries, India's most
valued company, and state-run GAIL India will next week mount
a pitch with Qatar for jointly setting up a USD 1.3 billion
mega petrochemical plant in the gas rich nation.
"A joint delegation will visit Qatar on July 7 to discuss
possibilities of setting up a mega petrochemical plant in that
country," GAIL Chairman and Managing Director U.D. Choubey
said on the sidelines of the 19th World Petroleum Congress
here.
Reliance and GAIL had on December 4, 2007 signed a
memorandum of understanding to jointly set up a mega gas-based
petrochemical plant.
They had initially identified 10 countries, including
Qatar, Abu Dhabi, Bahrain, Vietnam, Australia, South Africa,
Angola, Mexico, Russia and Former Soviet Union for exploring
possibilities of setting up to 2 million tons chemical plant.
"We have now zeroed in on Qatar, Iran, Algeria, Nigeria
and Russia," Choubey said. "We are looking at countries that
can provide natural gas as feedstock for the unit."
Petrochemical business, that contributed 32 percent to
GAIL's profit in 2007-08, will add up to 40 percent in this
year's profits.
"Petrochemical is our second most important business
after natural gas. We are raising capacity of our Pata
petrochemical plant to 4,40,000 tons in next six months (from
410,000 tons currently) and want to set up two mega units -
one in India and one abroad."
The Indian unit is being planned at Vizag in Andhra
Pradesh in a five-way joint venture with Total of France,
Hindustan Petroleum Corp Ltd, Mittal Energy, Oil India and
GAIL.
The five are exploring possibilities for setting up a 15
million tons a year export oriented refinery together with a
one million tons petrochemical plant at Vizag.
GAIL, he said, has also shown interest in setting up a
petrochemical unit in Iran and will be shortly sending a
formal proposal to National Petrochemical Company of Iran. "We
discussed the issue with the Iranian Oil Minister
Gholam-Hossein Nozari here and they have welcomed GAIL's
proposal."
"For Iran, we have proposed that GAIL and the Indian
private firm jointly set up the chemical plant in Iran," he
said.
Reliance and GAIL believe that there is a huge demand for
petrochemical products worldwide. This would need new
capacities and therefore, opportunity of setting up global
size petrochemical complexes, preferably gas based, in gas-
rich countries is being explored, Choubey said.
Back home, the two companies would also cooperate in
areas of distribution and marketing of petrochemicals,
including product-swapping.
Considering the geographical location of market centres
for certain grades vis-a-vis the production centres and
logistic advantages, the two companies shall consider product
swapping for maximising realisation.
The two entities will float special purpose vehicle with
equal stake to set up the overseas petrochemical plant.
Reliance and GAIL have set themselves a three-year
deadline for identifying and commencing work on the mega
petrochemical complex.
The agreement with Reliance is part of GAIL's strategy to
expand its petrochemical business. Petrochemical is one of the
three core areas identified by U.D. Choubey after he took over
as the head of India's largest gas transmission and marketing
company last year.
Other focus areas being gas transmission and distribution
and city gas distribution.
RIL and GAIL already have an agreement for cooperation in
the gas sector. The areas of joint cooperation identified,
include natural gas pipeline transmission and marketing, CBM
gas opportunities, city gas distribution, maintenance
services, exploration and production.
Sources said Choubey has initiated dialogues with
companies in Russia, Qatar, Nigeria and Algeria for setting up
petrochemical plants over the past few months. GAIL has opened
dialogue with LukOil of Russia and Qatar Petroleum and these
may be expanded to include RIL.
He had travelled to both Russia and Qatar in
October-November and held discussions with company officials.
In Russia, talks were also held with petrochemical major
Sibur.
Choubey also proposed to Nozari to set up city gas
distribution and CNG network in Iran. Chinese firms have also
shown interest in assisting Iran in setting up 1,400 CNG
retail outlets in the Persian Gulf nation.