ONGC Additional Investment in OPaL, Boosting Stake to 95.69%

The Indian government has approved the Oil and Natural Gas Corporation’s (ONGC) proposal to invest an additional ₹18,365 crore in ONGC Petro-additions Limited (OPaL).

This investment, announced by ONGC on Friday, August 9, 2024, will significantly increase ONGC’s stake in OPaL from 49.36% to 95.69%. The move is part of ONGC’s strategy to enhance its presence across the downstream and petrochemical value chain.

What is OPaL?

ONGC Petro-additions Limited (OPaL) is a petrochemical complex in Dahej, Gujarat, commissioned in 2017. Opal boasts the largest standalone dual-feed cracker in Southeast Asia.

A dual-feed cracker is a facility that converts naphtha and off-gases from refining into polymer-grade ethylene and propylene through a process known as thermal cracking. This process can also yield byproducts such as benzene, butadiene, gasoline, and toluene.

OPaL can produce up to 1.5 million metric tonnes per annum (MMTPA) of polymers and 0.5 MMTPA of chemicals, holding a 12% market share in India’s polymer segment.

Strategic Implications of the Deal:

The increased investment in OPaL will enable the company to secure a sustained supply of gaseous feed from the firm at a premium of up to 20% over the government’s Administered Pricing Mechanism (APM) gas price. ONGC is currently permitted to charge a premium of up to 20% over the APM price, which will benefit OPaL’s operations.

ONGC Share Performance:

Following the announcement, Oil and Natural Gas Corporation Ltd (ONGC) shares closed at ₹332.60 on the Bombay Stock Exchange (BSE) after the trading session on Friday, August 9, 2024. This represented a gain of 9.90 points or 3.07%.

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