GAIL And Shell Energy Will Explore Opportunities For Ethane Sourcing From The Global Market

GAIL And Shell Energy India Sign A Pact For The Exploration Of Ethane Sourcing For Infra Development Opportunities

Among the largest Indian state-owned natural gas processing and distribution companies, GAIL (India) Limited has linked with Shell Energy India Private Limited to enter a Memorandum of Understanding (MoU).

The MoU strives to probe prospects in many parts of the energy value chain.

GAIL plans to import US ethane to replace feedstock natural gas and naphtha at petrochemical plants.

The amount of ethane that will be imported by GAIL from Shell Energy India remains uncertain, but the company has expressed an interest in importing US ethane.

According to a statement, GAIL stated that along with Shell Energy India, it had inked a memorandum of understanding to explore infrastructure development opportunities for ethane sourcing. A month ago, the company floated a tender for leasing a huge ethane carrier (VLEC) for the duration of 20 years beginning mid-2026 for the import of US ethane. The 80,000 to 99,000 cubic metres of ship capacity aims to take deliveries from the US ports of Marcus Hook, Nederland, Morgan’s Point or Beaumont and supply ethane at Dahej or Hazira in Gujarat or Dabhol in Maharashtra.

The polymer-producing plant with an 810,000 t/yr capacity reached its maximum capacity utilisation in February by employing alternative sources of LNG, as per the company. GAIL referred to sources excepting  Russia following the sharp decline of state-controlled Gazprom imports after Russia's invasion of Ukraine.

GAIL saw a shortage in gas last year after a supply disruption from Gazprom, which led to it reducing the Pata plant's output by 40pc and even closing down in October, with just a partial facility working at the year-end, as per the director of finance Rakesh Jain, GAIL. The company is searching for alternative supplies of fuel for the Pata plant on a long-term basis.

GAIL and Shell Energy India's collaboration sets a major milestone in the firm's measures for improving its business operations.

The alliance will allow the diversification of GAIL's petrochemical plant feedstock by ethane import from nations that have extra ethane with developed export terminal infrastructure.

The company intends to move the ethane to India via waterborne transportation as well as via its 14,830km pipeline systems to mandate centres all over the country.

In spite of the latest drop in prices of natural gas, Indian petrochemical producers are not fully reliant on gas but looking out for different feedstock like ethane and naphtha for feedstock diversification, as per market players.

Private-sector Reliance Industries has also optimised naphtha and ethane as feedstocks for the production of its polymer.

In North America, ethane is produced in significant volumes as a result of the shale gas revolution in the US that led to the generation of LNG and LPG in abundance.

This diversification movement is anticipated to enhance the GAIL business's sustainability in its business operations.

The MoU anticipates prospects for exploration in the import and handling of various crucial hydrocarbons in the production of chemical and petrochemical feedstocks. This comprises exploration prospects in LNG for road transportation, the imported LNG's regasification, renewables, and such fields.

GAIL is an owner and operator of a 14,830 km natural gas pipeline network spread throughout the country's length and breadth.

The firm also operates together for the execution of considerable pipeline projects to advance their spread further.

GAIL also focuses on the expansion of its presence in renewable energy, including wind, solar, and biofuel.

According to the Procurement Resource article, a recent Memorandum of Understanding (MoU) has been signed by the largest Indian state-owned natural gas processing and distribution company, GAIL (India) Limited, with Shell Energy India Private Limited. The plan includes looking into opportunities in several aspects of the energy value chain.

The ethane for replacing feedstock natural gas and naphtha at petrochemical plants will be imported from the US to India via waterborne transportation as well as via its 14,830km pipeline systems to mandate centres all over the country. This diversification movement aims to improve the goals for GAIL's sustainability in its business operations.