Key Points of GAIL and Shell join hands for ethane sourcing exploration:
- GAIL, India’s largest gas utility company, has signed an agreement with Shell Energy India to explore ethane sourcing and infrastructure development opportunities along the energy value chain.
- The aim is to import ethane from the US to replace natural gas and naphtha as feedstock at petrochemical plants.
- GAIL recently floated a tender to hire a very large ethane carrier (VLEC) for 20 years starting mid-2026 to import ethane from the US.
- The government’s diversion of gas supplies from GAIL’s petrochemical plant at Pata to city gas suppliers affected the plant’s profitability, leading the company to supplement the feedstock with ethane to achieve improved sustenance in business operations.
- GAIL and Shell Energy India will explore prospects in the import and handling of different hydrocarbons, including LNG for road transport, regasification of imported LNG and renewables, and important chemical and petrochemical precursors.
- Ethane is produced in large volumes in North America due to the shale gas revolution and is primarily used as petrochemical feedstock to produce ethylene by steam cracking.
- GAIL is looking to import ethane from ethane-surplus countries with matured export terminal infrastructure through water-borne transportation to India and transport it further through GAIL’s pipeline systems to demand centers.
- The move towards diversification of feedstock is expected to lead to improved profitability for GAIL’s petrochemical operations.
Details of GAIL and Shell join hands for ethane sourcing exploration:
GAIL Signs Agreement with Shell Energy India for Ethane Sourcing and Infrastructure Development
India’s largest gas utility company, GAIL, has signed a memorandum of understanding with Shell Energy India Pvt Ltd to explore ethane sourcing and infrastructure development opportunities along the energy value chain. This is part of GAIL’s plans to import ethane from the US to replace natural gas and naphtha as feedstock at petrochemical plants.
GAIL recently floated a tender to hire a very large ethane carrier (VLEC) for 20 years starting mid-2026 to import ethane from the US. The company’s petrochemical plant at Pata, near Kanpur in Uttar Pradesh, had to cut down on run rate after the government diverted gas supplies from the plant to city gas suppliers, affecting profitability. The company is now looking to supplement the feedstock with ethane to achieve improved sustenance in business operations.
According to the MoU, GAIL and Shell Energy India will explore prospects in the import and handling of different hydrocarbons, including LNG for road transport, regasification of imported LNG and renewables, and important chemical and petrochemical precursors. Ethane, which is produced in large volumes in North America due to the shale gas revolution, is primarily used as petrochemical feedstock to produce ethylene by steam cracking, which is the starting material for making a wide range of products, including packaging films, wire coatings, and plastics and synthetic rubber.
GAIL, which commands around 68% market share in gas transmission and sells 53% of all gas sold in the country, is also looking to set up another petrochemical plant at Usar in Maharashtra. The company plans to import ethane from ethane-surplus countries with matured export terminal infrastructure through water-borne transportation to India and transport it further through GAIL’s pipeline systems to demand centers.
This move towards diversification of feedstock is expected to lead to improved profitability for GAIL’s petrochemical operations.
About GAIL (India):
GAIL, an Indian natural gas company, was established in 1984 as a Government of India undertaking. Its operations are integrated, with ownership of more than 11,500 km of natural gas pipelines, over 2,300 km of LPG pipelines, six LPG gas-processing units, and a petrochemicals facility. Additionally, GAIL has joint-venture interests in Petronet LNG Ltd, Ratnagiri Gas and Power Pvt Ltd, and the CGD business in various cities. To expand its presence outside India in LNG, petrochemical trading, and shale gas assets, GAIL has wholly owned subsidiaries in Singapore and the US.
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