In a significant development, State-run Oil and Natural Gas Corporation (ONGC) and GAIL India (GAIL) on Monday announced that they had reached a landmark agreement to ensure mutual business growth in the areas of natural gas as well as petrochemicals.

The two PSU giants signed a number of agreements and exchanged documents in this regard in the presence of the ONGC Chairman and Managing Director R. S. Sharma and GAIL Chairman and Managing Director B. C. Tripathi.

For gas business, both companies agreed to work together for exclusive sale of natural gas produced by ONGC from its various fields to GAIL during the next three years.

This joint initiative will serve as a catalyst for effective monetisation of gas from future exploration and production fields of ONGC with GAIL providing the infrastructure and marketing tie-up for supply to potential customers.

This would increase the availability of firm gas sourcing for infrastructure projects. The two companies also reached an understanding in swapping gas available to both the companies so as to optimise logistics and costs.

As for ONGC Petro Additions Limited (OPaL), GAIL agreed to become a co-promoter of 1.1 million tonnes per annum (mtpa) ethylene cracker petrochemical complex, under implementation in Dahej SEZ area, at a capital investment of Rs.19,535 crore. An understanding was also reached for marketing a portion of petrochemical products of OPaL by GAIL. Both would also explore the possibility of setting up a downstream unit using butadiene, a by-product of OPaL, to GAIL for manufacture of value-added products.

Mr. Tripathi said ONGC and GAIL have had a long and symbiotic association and today's [Monday's] development will certainly strengthen this business synergy for the mutual advantage of both the companies which will help promote long-term energy security in the country.

RELATED NEWS

Need for pro-active ‘energy diplomacy'December 29, 2010

ONGC board nod for 1:1 bonusDecember 16, 2010

More In: Industry | Business