GAIL signs Rs 63,000 cr deal to source petrochemical feedstock from BPCL

State-owned gas utility GAIL (India) Ltd has signed a Rs 63,000-crore deal to source feedstock for its upcoming petrochemical plant at Usar in Maharashtra from Bharat Petroleum Corporation Ltd for 15 years, the two companies said.

"The 15-year supply contract, estimated at a value of over Rs 63,000 crore, will see GAIL procuring 600,000 tonnes per annum of propane from BPCL's LPG import facility at Uran, which is presently capable of handling 1 million tonnes per annum of LPG imports and is undergoing expansion to accommodate 3 million tonnes a year of propane and butane imports," GAIL said in a statement.

GAIL is constructing India's first propane dehydrogenation (PDH) plant at Usar in Maharashtra with a nameplate capacity of 500,000 tonnes per annum. The facility, which is likely to commence operations in 2025, will have a propylene production seamlessly integrated into a polypropylene (PP) plant of equal capacity.

"This pioneering venture aligns perfectly with the surging demand for polypropylene, which is projected to reach 6.3 million tonnes by 2025, up from 4.9 million tonnes in 2020," it said.

Polypropylene (PP) is a tough, rigid, and crystalline thermoplastic that widely finds usage in packaging applications as well as houseware, furniture appliances, toys and luggage.

In a separate statement, BPCL said, "this groundbreaking collaboration between BPCL and GAIL stands as a testament to their dedication to driving India's petrochemical progress. It is not only a significant milestone for both organizations but also a momentous leap forward for the nation's thriving petrochemical sector."

The agreement was signed by BPCL executive director (LPG) D V Mamadapur and GAIL executive director (marketing-retail) Kamlesh Sharma in presence of BPCL Director (Marketing) Sukhmal Jain and GAIL Director (Marketing) Sanjay Kumar.

"The 15-year supply contract, estimated at a value of over Rs 4,250 crore per annum (based on current prices), will lead to BPCL providing GAIL with 600,000 tonnes per annum of propane from its LPG import facility at Uran," BPCL said.

GAIL is India's largest gas transportation and marketing company while BPCL is the nation's second biggest state-owned oil refining and fuel marketing company.