Reliance Industries to import US ethane to feed its crackers in India

14:51 PM | August 20, 2014 | Natasha Alperowicz

Reliance Industries (Mumbai) told the Bombay Stock Exchange today that it will source 1.5 million m.t./year of ethane from the United States to feed its crackers in India. The company has executed storage and capacity agreements for liquefaction and export of ethane with a North American terminal, which is expected to begin operating in the second half of 2016. "The shale gas industry in North America has grown exponentially in the past five years. As a result, ethane has become the dominant feedstock for crackers replacing liquids. Reliance's investments in shale gas and its existing crackers portfolio in India are a natural fit for sourcing ethane from North America and shipping it to India to attain long-term feedstock competitiveness," the company says in the statement. Reliance will upgrade the crackers to maximize the cracking of ethane. Doing so will top out operational flexibility and capability to optimize feedstocks with complete control of the supply chain, the company says.

Reliance has placed orders for six very large carriers from Samsung Heavy industries for $723 million to transport the liquefied ethane to India and is building storage facilities and pipelines to deliver ethane to its crackers. The vessels, 87,000 cubic meters each, will be the world's first very large carriers of ethane. The ships' deliveries are expected to start in the fourth quarter of 2016, in synchronization with the readiness of the terminal in North America, the statement says. "The project will significantly improve the long-term competitiveness of our cracker portfolio through dedicated feedstock, enhanced margins, higher capacity, and end-to-end integration," the statement says.

In India, Reliance has capacity to produce about 1.9 million m.t./year of ethylene, including 900,000 m.t./year at Hazira; 400,000 m.t./year at Nagothane; 190,000 m.t./year at Baroda; and 400,000 m.t./year at Dahej.  In addition, Reliance is building a 1.52-million m.t./year ethylene plant at its refinery and petrochemical complex at Jamnagar, Gujarat, State,  India. This facility, scheduled to be onstream next year, was originally designed to crack refinery off-gas.

Reliance joins a number of companies planning to use cheap US ethane to feed their crackers. These companies include Ineos, which plans to import US gas to feed its plants at Rafnes, Norway, and Grangemouth, UK; Borealis, which will import gas for its Stenungsund, Sweden, cracker; and Sabic, which is converting its Wilton, UK, naphtha cracker to use US ethane.