Petronet LNG Initiates Investment of INR 20,685 Crore in a Petrochemical Project
One of the quickest expanding Indian Public Limited Companies in the energy industry, Petronet LNG was responsible for setting up the country’s first LNG collection and regasification depot. Installed at Dahej, Gujrat, this facility presently boasts a nominal capacity of 17.5 million metric tons per annum. A secondary terminal having a nominal capacity of 5 million metric tons per annum was built in Kochi, Kerala. The company is looking into diversification of its services and products to keep up with sustainable trends while dominating the fuel market.
The leading Indian gas importer has decided to make its business presence known outside the country. In order to capitalize on existing opportunities to expand its network internationally, Petronet LNG has initiated an investment of INR 20,685 crore dedicated to establishing a petrochemical plant at Dahej. The Gujrat-based project aims to diversify the company’s business operations to better adapt to the volatile tendencies of the energy market. Earlier this week, in Petronet’s board of directors meeting, the company announced the approval of the investment. The officials are enthusiastic about the petrochemical project, expecting the generation of significant revenue via the production and manufacturing of compounds like polypropylene, ethane, propane, hydrogen, and propylene.
Petronet plans to import materials like ethane to make industrially beneficial compounds. These products would act as the building blocks for a wide variety of consumer goods. Ranging from plastics and accessories to detergents and cosmetics, the project will significantly increase the company’s portfolio of goods and services. The plant has the potential to enhance India’s ranking in the field of petrochemicals with the aid of its self-efficient filing. The venture would also catapult the socio-economic standing of the region through a series of well-planned investments, simultaneously creating several leads for direct as well as indirect employment. The decision to diversify petrochemicals came at a reasonable time.
The rise of governmental initiatives and policies aimed towards making India a petrochemical hotspot, combined with the enthusiasm of state-run organizations looking for opportunities to strengthen their foothold in this sector, further enhanced the potential of the project. They plan to “improve their top line and bottom line substantially” with several unique synergies with the import facility. The petrochemical facility is designed to support 750,000 tons per annum of propane dehydrogenation (PDH) and 500,000 tons of polypropylene every year. Petronet’s stride into the petrochemicals business is beneficial for the global standing of India.
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The binding term sheet approved by the board of directors details a controlled execution plan. Deepak Phenolics Limited (DPL) will aid the offtake with around 250,000 tons of propylene and another 11,000 tons of hydrogen for a time frame of 15 years. The company aims to raise the import capacity of the Dahej facility from its initial 17.5 million tons per annum to a much more enormous 22.5 million tons per annum.
This is estimated to cost INR 600 crore, with an additional 1,250 crore for the installation of two LNG storage tanks. The CEO of Petronet LNG Ltd., A K Singh, believes that the petrochemical project would have a high rate of return. The company estimates a gradual build-up over the next four years. “The project is planned to give a 30 percent return on equity, and the market should not have any apprehensions about the profitability of the venture,” said the CEO.
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