ONGC to Invest Rs 1 Lakh Crore in Two Petrochemical Plants for Direct Crude-to-Chemical Conversion

India’s leading oil and gas producer, ONGC, reveals plans to invest approximately Rs 1 lakh crore in establishing two petrochemical plants dedicated to converting crude oil directly into high-value chemical products. Positioned for the energy transition, ONGC aims to venture into the petrochemical space, capitalizing on new avenues for utilizing crude oil. Petrochemicals, derived from crude oil, are integral to manufacturing detergents, fibers, polythene, and other plastics.

At an investor call discussing the second-quarter earnings, ONGC Director (Finance) Pomila Jaspal outlined the company’s ambitions to develop separate oil-to-chemical (O2C) projects. The investment of Rs 10,000 crore in two projects across two states is planned by 2028 or 2030, with an objective to raise petrochemical capacity to 8.5-9 million tonnes by 2030. While one project may be undertaken solely by ONGC, the other is likely to materialize through a joint venture, details of which were not disclosed during the call.

This strategic move aligns with the global shift away from fossil fuels, opening up opportunities for companies to explore innovative uses of crude oil. The demand for petrochemicals remains robust, driven by diverse applications across industries such as construction, automotive, and electronics.

ONGC’s foray into petrochemicals is anticipated to reduce reliance on the volatile oil market, enhancing long-term profitability. The company, already managing petrochemical units through subsidiaries MRPL and OPaL, aims to strengthen its chemical business. The ONGC board has approved an infusion of Rs 18,355 crore in OPaL to increase its stake to over 96%, reshaping the capital structure. While GAIL currently holds a stake in OPaL, ONGC’s equity infusion aims to make OPaL a subsidiary temporarily, with plans to bring in a strategic partner in the next three years.

The investment in O2C plants is distinct from ONGC’s previously announced Rs 1 lakh crore investment in energy transition projects by 2030, aligning with its goal of achieving net zero carbon emissions by 2038. As the global energy landscape evolves, ONGC’s diversified approach positions it to navigate and contribute to the changing dynamics of the industry.