ONGC eyes IPO for Dahej petrochem plant

New Delhi: Oil and Natural Gas Corporation (ONGC), the country's largest oil producer, is looking at an initial public offering (IPO) of its subsidiary that is building a Rs 13,600-crore petrochemical plant at Dahej in Gujarat.

ONGC is considering selling up to 25 per cent of the equity shares in ONGC Petro-additions (OPaL), the special purpose vehicle formed for setting up the petrochemical complex at Dahej special economic zone (SEZ), a senior company official said. It plans to give 19 per cent equity stake in OPaL to state-run gas utility Gail India, while another 25 per cent interest may be offered to Petronet LNG and Bharat Petroleum or a strategic partner.

'We are not considering the IPO right now. The offering may happen in 2010-11 or even closer to the project completion in 2012,' the official said.

ONGC holds 26 per cent stake in OPaL and 5 per cent is with Gujarat State Petroleum Corp (GSPC). OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.

The Rs 1,100-crore plant to extract C2-C3 from the LNG that Petronet imports from Qatar would be ready by year-end but the petrochemical project would not come up before 2012. ONGC would in the interim period sell C2-C3 compounds to companies like Reliance-owned IPCL or even export, he said.

While Gail had sought equity in OPaL as it already had a presence in petrochemical business, Petronet may be offered an equity as it imports five million tons a year of rich-LNG (gas containing C2-C3 compounds).