Oil and Natural Gas Corporation is looking at an initial public offering of its subsidiary that is building a Rs 13,600-crore (Rs 136-billion) petrochemical plant at Dahej, closer to project completion in 2012.

ONGC [Get Quote] is considering selling up to 25 per cent of the equity shares in ONGC Petro-additions Ltd (OPaL), the special purpose vehicle formed for setting up the petrochemical complex at Dahej SEZ, a senior company official said.

It plans to give 19 per cent equity stake in OPaL to state-run gas utility GAIL India [Get Quote], while another 25 per cent interest may be offered to Petronet LNG [Get Quote] and Bharat Petroleum or a strategic partner.

"We are not considering the IPO right now. The offering may happen in 2010-11 or even closer to the project completion in 2012," the official said.

ONGC holds 26 per cent stake in OPaL and five per cent is with Gujarat State Petroleum Corp.

OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.

The Rs 1,100-crore (Rs 11-billion) plant to extract C2-C3 from the LNG that Petronet imports from Qatar would be ready by year-end but the petrochemical project would not come up before 2012.

ONGC would in the interim period sell C2-C3 compounds to companies like Reliance-owned IPCL [Get Quote] or even export, he said. 

While GAIL had sought equity in OPaL as it already had a presence in petrochemical business, Petronet may be offered an equity as it imports five million tons a year of rich-LNG (gas containing C2-C3 compounds).

The official said the project is being funded in 2.55:1 debt-equity ratio. 

The debt-equity ratio of the petrochemical project is 2.55:1. The petrochemical complex would comprise of global scale cracker and downstream polymer plants, the official said.

This complex would be integrated with ONGC's C2-C3 plant, which is currently under execution (at Dahej) and Naphtha as feedstock from ONGC's operational units at Hazira and Uran.

The complex comprises of 1.1 million tonnes per annum of ethylene capacity dual feed cracker, along with associated units and polymer plants, to manufacture HDPE, LLDPE, PP and Styrene Butadiene Rubber.

The cracker would have the largest capacity in the country so far.