GAIL (India) Ltd.

GAIL infuses Rs 2,100 crore in JBF Petrochemicals

June 02, 2023

India's largest gas firm GAIL has infused Rs 2,100 crore in insolvent private-sector chemical company JBF Petrochemicals Ltd that it had acquired in bankruptcy proceedings. The firm had in March won bankruptcy court approval for taking over JBF.

In a stock exchange filing, GAIL (India) Ltd said it has "infused Rs 2,101 crore (equity - Rs 625 crore and debt - Rs 1,476 crore)" in the committed bankruptcy resolution plan.

"Accordingly, JBF has become a wholly-owned subsidiary of GAIL with effect from June 1, 2023," it said.

GAIL had outbid a consortium of Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) in the insolvency process run by IDBI Bank to recover Rs 5,628 crore of dues to financial and operational creditors.

JBF Petrochemicals was incorporated in 2008 to set up a 1.25 million tonne per annum capacity purified terephthalic acid plant at Mangalore Special Economic Zone.

IDBI and other banks had lent JBF money to build the PTA plant for USD 603.81 million with technology support from BP and 50,000 tonnes per month of the feedstock of paraxylene from state-controlled chemical producer OMPL.

The plant, which is a backward integration project for JBF Industries' polyester plants, was commissioned in 2017 but stopped operations after the company defaulted on its loans in the same year.

The default led to the lenders dragging it to corporate insolvency and bankruptcy (IBC).

Lenders and operational creditors, including employees, claimed Rs 7,918 crore in dues but only Rs 5,628 crore in dues, including Rs 712 crore towards operational creditors were admitted.

Initially, three parties - a consortium of IOC-ONGC, MPCI Pvt Ltd and GAIL - submitted bids in August 2022 to acquire JBF.

They were asked to improve their financial proposals and cure defects. At the last date on September 22, 2022, revised resolution plans were received only from the IOC-ONGC consortium and GAIL, the NCLT order said.

GAIL has an existing petrochemical plant at Pata, Uttar Pradesh, with a polymers production capacity of 8,10,000 tonnes per annum. It is aiming to build a propane dehydrogenation plant in Usar, Maharashtra, by next year, which will have a nameplate capacity of 5,00,000 tonnes a year of polypropylene.

GAIL to build $4.89-bn ethane cracker near LNG import plant in West India

May 10, 2023

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 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.

GAIL imitates Reliance with US ethane plans

February 19, 2023

Source: Economic Times

India's largest gas firm GAIL is imitating billionaire Mukesh Ambani-led Reliance Industries Ltd in planning to import ethane from the US to replace natural gas and naphtha as feedstock at its petrochemical plants. "In a bid towards diversification of the feedstock, GAIL is looking to import ethane from ethane-surplus countries with matured export terminal infrastructure through water borne transportation to India and transport it further through GAIL's pipeline systems to demand centres," the company said in a tender document.

It sought quotes to hire a very large ethane carrier (VLEC) for 20 years starting mid-2026 for importing ethane from the US. The ship with capacity of 80,000 to 99,000 cubic metres is targeted to take deliveries from US ports of Marcus Hook, Nederland, Morgan's Point or Beaumont and deliver ethane at Dahej or Hazira in Gujarat or Dabhol in Maharashtra.

GAIL has a petrochemical plant at Pata, near Kanpur in Uttar Pradesh, and is also looking to set up another unit at Usar in Maharashtra. The company had to cut down on run rate at Pata after the government diverted gas supplies from the plant to city gas suppliers. This led to its profitability being impacted and so now the company is looking to supplement the feedstock with ethane.

Reliance had in 2014 announced ethane plans in 2014 and started importing the feedstock from the US in 2017. It is importing 1.6 million tonnes per annum of ethane and is using six VLECs for transporting it to India.

With ethane replacing propane and naphtha used in ethylene production, Reliance is estimated to have saved about USD 450 million annually.

Reliance used 2.5 million tonnes a year of naphtha as feedstock in petrochemical crackers and ethane reduced its use by 5,00,000 tonnes, which now could be exported.

 Ethane is expected to be produced in large volumes in North America due to the shale gas revolution, which has generated an abundance of liquefied natural gas (LNG) and liquefied petroleum gas (LPG). It is primarily used as petrochemical feedstock to produce ethylene by steam cracking.

Ethylene is the starting material for making a wide range of products -- from packaging films, wire coatings, and squeeze bottles as well as plastics and synthetic rubber.

Reliance uses ethane at its crackers in Dahej and Hazira in Gujarat and Nagothane in Maharashtra.

GAIL in the tender said it is looking at co-transportation of ethane and LNG through the same vessel loaded in separate compartments.

"Bidders may indicate whether the vessel offered for time-charter is compatible for part loading of ethane and LNG. In case of co-transportation the primary and secondary fuel options may necessarily be indicated," GAIL said.

GAIL said the 20 year charter hire agreement can be extended by a further 5 years.

Last date for submission of an expression of interest (EoI) for offering VLECs is February 25.