US-imported Ethane Will Replace Naphtha In This Company

547
Credit: joshua-sun-unsplash

GAIL (India) follows Reliance. Plans to replace naphtha with ethane imported from the US, states a Polymer Update news article.

Plans to import ethane from the United States

Following in the footsteps of Reliance Industries Ltd (RIL), GAIL India Ltd (GAIL), plans to import ethane from the United States to replace natural gas and naphtha as feedstock for its petrochemical facilities. Moving in this direction, GAIL and the Central Board of Direct Taxes (CBDT) entered into a landmark advance pricing agreement (ArA) for determining the transfer pricing margin payable on its long-term LNG sourcing contract from the USA for five years.

Now, GAIL (India) seeks to import ethane from countries that have surplus availability, in an attempt to diversify the feedstock and save revenue outgo on regular basis. The public sector gas supplier aims to develop export terminal infrastructure through waterborne transportation to India and then transport it further through its own pipeline systems to demand centers. Reports said that GAIL (India) has already invited quotations for a 20-year contract period beginning mid-2026 for which the company is all set to hire very large ethane carriers (VLECs) to import ethane from the United States.

The VLEC, the very large vessel, has the capacity to carry between 80,000 – 99,000 cubic meters of ethane and is intended to pick up cargo from the United States ports of Marcus Hook, Nederland, Morgan’s Point, or Beaumont and to deliver it on Dahej, and Hazira in Gujarat or Dabhol in Maharashtra.

Also, GAIL (India) is aiming to build another unit at Usar in Maharashtra in addition to its petrochemical facility at Pata, close to Kanpur and Uttar Pradesh. After the government shifted gas supplies from the plant to municipal gas suppliers, GAIL India had to reduce its transport through Pata. This had an effect on its profitability and prompted the company to move towards ethane as a feedstock supplement.

Experience at Reliance Industries

Mukesh Ambani-led Reliance Industries Ltd (RIL) is reported to have saved around US$450 million annually by switching to ethane from propane and naphtha used in the manufacturing of ethylene. The company began importing US feedstock in 2017 after announcing ambitions to produce ethane in 2014. According to reports, RIL used six VLECs to transport 1.6 million tonnes of ethane which the company imports every year.

At RIL, ethane decreased the company’s use of naphtha by around 5,000 tonnes and also allowed the company to export additional feedstock (naphtha). Annually, RIL uses 2.5 million tonnes of naphtha as feedstock in petrochemical crackers. In fact, ethane production in North America is projected to increase sustainably and significantly due to the shale gas revolution which eventually produces an abundance of liquefied natural gas (LNG) and liquefied petroleum gas (LPG).

With steam crackers, ethane is largely used as a petrochemical feedstock to make ethylene. Beginning with ethylene, a variety of articles such as packaging films, wire coatings, squeeze bottles, plastics, and synthetic rubber can be products. Reliance abundantly uses ethane at its crackers in Nagothane in Maharashtra, Dahej, and Hazira in Gujarat.

GAIL offers options to bidders

GAIL (India) in a tender said that the company was considering co-transporting LNG and ethane in the same vessel but loaded in different departments. The company offered bidders the option to specify whether the time-charter vessel is capable of accepting LNG and ethane component loads. The primary and secondary fuel sources may need to be suggested in case of co-transportation. In fact, the 20-year charter hiring contracts can be extended by a further period of five years.

The government-owned GAIL (India) is actively engaged in the business of natural gas, liquid hydrocarbon, the transmission of LPG, petrochemicals, city gas distribution, renewable energy including solar and wind, exploration and production, GAILTel, and electricity generating, among others.

 

Did you subscribe to our daily Newsletter?

It’s Free! Click here to Subscribe!

Source: Polymer Update