ONGC to pour Rs 1 trillion in capacity expansion

ONGC plans to invest Rs 1 trillion by 2030 to boost its petrochemicals manufacturing capacity.

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The Oil and Natural Gas Corp (ONGC) is planning to invest Rs 1 trillion by 2030 to increase its petrochemicals manufacturing capacity. This move is part of the Indian government’s aim to establish the country as a significant global petrochemical hub.

The expansion plans will be carried out by ONGC’s joint venture – ONGC Petro additions Ltd (OPaL) and it’s subsidiary – Mangalore Refinery and Petrochemicals Ltd (MRPL), with a goal of doubling their production to 8 million metric tonnes per annum by 2030.

In addition to this, two large-scale projects are being considered, one on the east coast and the other on the west coast of the country. These plants will either use crude oil directly for chemical production or obtain the stock from other sources.

Before embarking on the expansion plans, ONGC will need to address two key challenges.

The first challenge is related to the capital structure of ONGC Petro additions Ltd (OPaL), which has taken on a significant debt of Rs 35,000 on a relatively small equity base. To resolve this, a team of experts is considering options such as making OPaL a subsidiary of ONGC or finding a new equity investor.

Another obstacle that ONGC faces in its petrochemicals manufacturing expansion plans is the decrease in the supply of affordable domestic natural gas. The Indian government has redirected the supply of domestic natural gas to other industries, leaving ONGC reliant on expensive imported gas. This situation creates a challenge for ONGC to maintain its cost competitiveness in the petrochemicals manufacturing sector.