State-run GAIL India may have put its mega petrochemicals plan on the backburner because of falling global demand.
GAIL had planned to set up two new mega petrochemicals plants - one overseas and one in India — but the fall in demand for polymers may have slowed the process.
"Economic slowdown is affecting and naturally we are going slow," GAIL Chairman and Managing Director U D Choubey said.
He, however, did not elaborate.
GAIL had in December 2007 signed a memorandun of understanding (MoU) with Reliance Industries to jointly set up a mega petrochemicals plant in gas-rich Middle-East, Central Asia or Russia. It also signed a similar agreement with Indian Oil Corp (IOC) for a plant at Barauni in Bihar.
The MoU signed with RIL on December 4, 2007 listed Qatar, Abu Dhabi, Bahrain, Vietnam, Australia, South Africa, Angola, Mexico, Russia and Former Soviet Union countries as areas where the two would explore jointly establishing up to 2 million tonnes chemical plant.
At that time RIL and GAIL believed that there was a huge demand for petrochemical products worldwide but there has been a downturn in demand after the financial crisis broke out in the US and Europe.
The agreement with RIL and IOC were part of GAIL's strategy to expand its petrochemical business. Petrochemicals is one of the three core areas identified by the India's largest gas transmission and marketing company. The other focus areas being gas transmission and distribution and city gas distribution.
GAIL also teamed-up with state refiner IOC to explore possibilities of setting up a Rs 22,000-crore petrochemicals plant at Barauni in Bihar.
The proposed plant was to use 250,000 tonnes of naphtha produced by IOC's Barauni refinery and the natural gas that GAIL plans to bring from eastern offshore and imported LNG through the planned Jagdishpur-Haldia pipeline.
A 130-km spur line from Gaya to Barauni would be laid to transport gas to Barauni fertiliser plant, IOC's refinery and the proposed petrochemical unit. GAIL's Jagdishpur-Haldia pipeline would transport gas found in eastern offshore. GAIL would, however, continue on its plans to double its Pata petrochemicals plants capacity to 8,00,000 tonnes in 3-4 years.
The proposed unit at Barauni would be of a minimum 3,00,000 tonnes capacity.
