ONGC to Take 50% Stake in Ethane Carriers Operated by Japan's Mitsui

Oil and Natural Gas Corporation will take a 50% stake in two joint venture companies that will own and operate very large ethane carriers (VLECs) in partnership with Japan's Mitsui OSK Lines, marking the state-owned firm's entry into specialised ethane shipping.

Oil and Natural Gas Corporation Ltd (ONGC), in a statement, said it has signed joint venture and capital contribution agreements with Mitsui OSK Lines Ltd (MOL) to invest in Bharat Ethane One IFSC Pvt Ltd and Bharat Ethane Two IFSC Pvt Ltd, both registered in GIFT City, Gandhinagar.

MOL will hold the remaining 50% stake in each entity.

Each joint venture will own one VLEC, which will be operated by MOL and sail under the Indian flag. The vessels will transport ethane from the United States to supply ONGC Petro additions Ltd (OPaL), ONGC's petrochemicals subsidiary.

"The Maharatna company shall subscribe to 2,00,000 equity shares of ₹100 per share, in each of the joint venture companies. Upon completion of the equity subscription, ONGC shall hold a 50% equity stake in each of the joint venture entities, with the remaining 50% held by MOL," a statement said.

ONGC said the partnership leverages MOL's global shipping expertise and ONGC's scale and market presence to strengthen integration across the energy value chain.

The move represents a strategic diversification for ONGC into energy logistics and specialised shipping, aimed at securing long-term ethane supplies and capturing value beyond upstream operations.

The specialised ships, to be built in Korean shipyards at an estimated cost of USD 370 million for the pair, are intended to secure the petrochemical feedstock for ONGC Petro additions Ltd's (OPaL) Dahej facility, with ethane imports beginning around mid-2028.

Mitsui and its partners currently own and operate four liquefied natural gas (LNG) ships for Petronet LNG Ltd, India's biggest LNG importer, and six ethane carriers for Reliance Industries Ltd.

ONGC plans to import ethane starting in mid-2028 to compensate for the altered composition of LNG sourced from Qatar, according to a tender that the state-owned firm floated in March this year for selecting a partner for building the VLECs.

India imports 7.5 million tonnes per annum of LNG from Qatar. Under the deal, QatarEnergy supplies 5 million tonnes a year of LNG that contains methane (used to produce electricity, make fertiliser, converted into CNG or used as cooking fuel), as well as ethane and propane -- feedstock to make LPG and petrochemicals — on a firm basis and the rest on a best endeavour basis.

This contract is coming to an end in 2028, and the revised contract signed last year envisages QatarEnergy supplying 'lean' gas (one that is stripped of ethane and propane).

ONGC had spent about ₹1,500 crore in setting up a C2 (ethane) and C3 (propane) extraction plant at Dahej in Gujarat. The C2/C3 so extracted was used as a feedstock in its petrochemical subsidiary, OPaL.

With the changed composition of LNG, the company is now looking at importing ethane.

OPaL "is having a mega grassroots petrochemical complex and is having the largest standalone dual feed cracker in Southeast Asia. Plant is having a dual feed cracker, i.e. a mix of Naphtha and C2 (Ethane), C3 (Propane) & C4 (Butane) as feedstock," the tender document had said.

"ONGC plans to source and supply 8,00,000 tonne per annum of ethane to secure the feedstock for OPaL, from May 2028 onwards." And to ship this ethane, it has formed a joint venture with Mitsui to build VLECs that could ship the feedstock.

ONGC will be responsible for sourcing ethane. It will hire the VLECs from the joint venture for the shipping of ethane.

ONGC built the C2/C3 extraction unit at Dahej in Bharuch district of Gujarat in 2008-09. However, its subsidiary OPaL could build the petrochemical plant only in 2017. It sold the C2-C3 compounds extracted from the imported LNG from Qatar, to Reliance Industries-owned IPCL till its plant to convert them into polymers came up.

C2-C3 plant has a handling capacity of 4.9 million tonnes per annum of LNG. OPaL plant comprises 1.1 million tonne a year of ethylene capacity dual feed cracker, along with associated units and polymer plants, to manufacture HDPE, LLDPE, PP and Styrene Butadiene Rubber.