Reliance Industries, India's most valued company, and state-run gas firm GAIL India have identified 10 countries including Qatar, Australia and Russia for setting up a multi-billion-dollar petrochemical plant.
An MoU signed by RIL and GAIL on December 4 lists Qatar, Abu Dhabi, Bahrain, Vietnam, Australia, South Africa, Angola, Mexico, Russia and Former Soviet Union countries as areas where the two would explore jointly establishing up to 2 million tons chemical plant.
"RIL 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," a GAIL official 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 official said.
The two entities will float special purpose vehicle with equal stake to set up the overseas petrochemical plant. "Prior to the formation of SPV, each opportunity for cooperation would be examined by a Working Group comprising of representatives of both the companies," the official said.
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 earlier this 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 over the past couple of months initiated dialogues with companies in Russia, Qatar, Nigeria and Algeria for setting up petrochemical plants. 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.
