ONGC Raises Stake in Gujarat Petrochemical Complex. The Indian government has approved Oil and Natural Gas Corp. Ltd.’s (ONGC) proposal of an additional investment of INR 183.65 billion ($2.2 billion) in ONGC Petro-additions Limited (OPaL).
This results in ONGC increasing its 49.36 percent stake in the petrochemical complex in Dahej, Gujarat to 95.69 percent, the state-owned company said in a statement. The co-partners are Gas Authority of India and Gujarat State Petroleum Corp. Ltd.
Commissioned 2017, OPaL can produce up to 1.5 million metric tons of polymers and 500,000 metric tons of chemicals annually. OPaL holds a 12 percent share of India’s polymer market, according to ONGC.
“The Government’s approval to increase ONGC’s equity stake in OPaL shall help in rectifying OPaL’s capital structure with a healthy Debt Equity ratio”, ONGC said. “With this infusion, ONGC’s cumulative investment in OPaL will stand to Rs.22,728 Crores [$2.7 billion]”.
“The said Government approval also assures a sustained supply of gaseous feed to OPaL by ONGC from its new gas from nomination fields at a premium of up to 20 percent over APM gas price”, it said, referring to the Administered Price Mechanism, the price that the government allows producers to charge for gas from nominated fields. “As such, ONGC is allowed a premium of up to a maximum of 20 percent over the APM price”.
“The decision aligns with ONGC’s strategic vision to become an integrated global energy major by increasing its presence across the downstream and petrochemical value chain as well”, ONGC added.
Later ONGC said that the Petroleum and Natural Gas Ministry has endorsed ONGC’s 20 percent premium over the APM price for gas produced from new wells or well interventions.
“As per Guidelines for domestic gas pricing, domestic natural gas price (APM Price) was fixed at 10 percent of the Indian Crude basket price as announced by Petroleum Planning and Analysis on monthly basis”, ONGC said in a press release Monday. “It was provided in the guidelines that for the gas produced from new wells or well intervention in the nomination fields of ONGC/Oil India Limited, there would be a premium of 20 percent over APM prices (i.e. total 12 percent of Indian Crude basket price for new gas). The modalities for the same had to be worked out by Directorate General of Hydrocarbon for approval of Ministry of Petroleum and Natural Gas”. ONGC Raises Stake in Gujarat Petrochemical Complex
“The enhanced price for new gas will make the new gas development projects viable and help the ONGC to augment the production of Natural Gas from nominated fields in challenging areas that require higher amount of capital and technology”, it added. “This will enhance the investment capacity in the Company to take up development projects which are otherwise capital intensive and involve higher degree of risks requiring commensurate prices”.
India aims to raise the share of natural gas in its energy mix to 15 percent by 2030, from 6.7 percent as of the end of 2023 according to the Petroleum and Natural Gas Ministry.
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