ONGC, Petronet LNG enter 15-year deal for ethane handling services

The government-sector Maharatna company Oil and Natural Gas Corporation (ONGC) Ltd has executed a 15-year deal with Petronet LNG Ltd (PLL) for ethane unloading, storage, and handling (USH) services. The binding term sheet for the ethane services will commence sometime between October and December 2028 and will conclude on the fifteenth (15th) anniversary of the commencement date.

Petronet LNG is developing ethane unloading, storage, and handling (USH) facilities with an ethane storage tank capacity of approximately 1,70,000 cubic metres at Dahej, Gujarat. The company is also constructing a unique third jetty at Dahej, which will be capable of handling ethane and propane in addition to liquefied natural gas (LNG).

The ethane Unloading, Storage and Handling (USH Services) Term Sheet was signed on December 3, 2025, at ONGC’s corporate office in New Delhi in the presence of Arun Kumar Singh, Chairman & Managing Director (CMD) of ONGC, and Akshay Kumar Singh, Managing Director & Chief Executive Officer (CEO) of PLL. ONGC is one of the promoters and a related party of PLL. The CMD of ONGC is one of the Nominee Directors on the Board of PLL, in accordance with the provisions of PLL’s Articles of Association. This transaction is being conducted on an arm’s-length basis.

Meanwhile, the Ministry of Petroleum & Natural Gas, Government of India, has conveyed that the Appointments Committee of the Cabinet (ACC) has approved the re-employment of Arun Kumar Singh as Chairman and Managing Director of ONGC on a contract basis for a further period of one year with effect from December 7, 2025, or until the assumption of charge by a regular incumbent, or until further orders, whichever is earlier.

Term sheet
As per the term sheet, ONGC will reserve a capacity of approximately 600,000 TPA at PLL’s ethane storage and handling facilities at Dahej, Gujarat. Petronet LNG will receive, store, and handle ethane sourced and imported by ONGC or its subsidiaries or affiliates at Dahej, and will re-deliver the ethane to ONGC at the designated delivery point. The term sheet will form the basis for definitive agreements between the parties.

Under the commitments outlined in the binding term sheet, PLL is expected to earn gross revenue of about Rs 5,000 crore over the 15-year contract period. The transaction under the term sheet will commence in FY 2028–29. This development marks a significant milestone in PLL’s strategic vision to develop and offer ethane import infrastructure to third parties, thereby expanding its business portfolio beyond LNG and strengthening its position in India’s petrochemical and energy value chain.

Petronet LNG’s under-construction, first-of-its-kind third jetty at Dahej will facilitate the unloading, storage, and handling of ethane, propane, and LNG, and will be made available for third-party imports. This initiative underscores PLL’s commitment to supporting the growth of downstream industries, particularly the petrochemicals sector, by providing world-class import infrastructure for ethane and propane in addition to its existing LNG regasification facilities.

Strategic move
The execution of the term sheet is a strategic move for both public sector companies. As part of its long-term strategy to ensure a reliable and consistent supply of ethane to ONGC Petro Additions Limited (OPaL), ONGC plans to procure and import ethane—via Very Large Ethane Carriers (VLECs) of approximately 100,000 CBM capacity—on a long-term, short-term, and spot basis.

This agreement provides ONGC with assured capacity booking for the import of ethane to meet the feedstock requirements of OPaL. ONGC’s subsidiary, ONGC Petro Additions Limited (OPaL), operates one of India’s largest petrochemical complexes at Dahej, Gujarat, which includes a world-scale ethylene cracker unit that uses ethane as its primary feedstock.

Petronet LNG Ltd (PLL)
Petronet LNG Ltd is a joint venture promoted by four Oil & Gas Maharatna PSUs— Gas Authority of India Ltd (GAIL), ONGC, Indian Oil Corporation Ltd (IOCL), and Bharat Petroleum Corporation Ltd (BPCL)—each holding a 12.5 percent equity stake. Incorporated in 1998, PLL commands 43 percent of India's LNG regasification capacity and manages around 2/3rd of the nation’s LNG imports. With a turnover of approximately Rs 51,000 crore in FY 2024–25, PLL plays a vital role in India’s energy ecosystem, contributing about 33 percent of the country’s total natural gas supply.

PLL, with its two LNG regasification terminals at Dahej, Gujarat and Kochi, Kerala has a total regasification capacity of 22.5 MMTPA. It is further augmenting Dahej terminal capacity from 17.5 MMTPA to 22.5 MMTPA, which is likely to be commissioned shortly. Further, PLL is also in process of setting up a land based greenfield LNG regasification terminal of 5 MMTPA capacity on East Coast of India at Gopalpur, Odisha. PLL is also setting up a 750 KTA PDH and 500 KTA PP unit including ethane and propane handling facilities at Dahej, Gujarat.

Oil and Natural Gas Corporation (ONGC) Ltd
Oil and Natural Gas Corporation (ONGC) Ltd is a Maharatna public sector enterprise and India’s leading integrated energy company, engaged in a wide range of business activities across the hydrocarbon value chain. ONGC’s operations span from exploration and production of hydrocarbons to refining, petrochemicals, and distribution of petroleum products. ONGC is the largest crude oil and natural gas Company in India, contributing around 71 percent to Indian domestic production.

ONGC Petro Additions Limited (OPaL) is a subsidiary of ONGC, in which the parent company holds a 95.69 percent equity stake. OPaL’s mega petrochemical plant is spread over 5 sq. km in Dahej, Gujarat with a capacity to produce 1.4 million tonnes of polymers and 0.5 million tonnes of chemicals – 1.1 million TPA ethylene, 400,000 TPA propylene and the associated units consist of Pyrolysis Gasoline Hydrogenation Unit, Butadiene Extraction Unit and Benzene Extraction Unit.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com