ONGC Partners with Japanese Shipping Leader for Construction of Two New VLECs

India’s Oil and Natural Gas Corporation (ONGC) has teamed up with Mitsui O.S.K.Lines (MOL), a major player in global shipping from Japan, to create and manage two Very Large Ethane carriers (VLECs). Citing data from Reuters, this collaboration is part of ONGC’s broader strategy to enhance it’s oil-to-chemicals operations while securing a reliable ethane supply for its subsidiary, ONGC petro additions Ltd (opal).

The partnership agreement was inked on July 3, 2025, but it still awaits the green light from ONGC’s board as noted in their stock exchange filing. the plan involves these colossal vessels being utilized for importing ethane from various international sources.

Starting May 2028, ONGC aims to import around 800,000 tonnes of ethane each year. This imported material will be directed to OPaL’s facility located in Dahej, Gujarat—home to one of the largest standalone dual-feed crackers in Southeast Asia.

According to company statements, these new carriers are expected to ensure a consistent and self-sufficient feedstock supply for OPaL. This move is crucial for bolstering advanced petrochemical production within India.

Ethane plays an essential role in the petrochemical sector as it serves primarily as a precursor for producing ethylene—a compound that goes on to create various plastic products such as containers and packaging materials.

Earlier this year, Arunangshu Sarkar—ONGC’s Director of Strategy & Corporate Affairs—shared with BusinessLine that the company envisions evolving into a extensive energy solutions provider encompassing exploration and production alongside oil-to-chemicals initiatives. The oil-to-chemicals division is projected to emerge as one of ONGC’s key revenue streams.

In August 2024, the Indian government sanctioned additional funding for OPaL by permitting ONGC an equity investment amounting to ₹10,501 crore. this move raised ONGC’s stake in OPaL significantly—to about 95.69%. Consequently, total investments made by ONGC into its petrochemical venture have reached ₹22,728 crore.

OPaL’s Dahej facility commenced operations back in 2017 and boasts an remarkable capacity of producing 1.5 million tonnes per annum (MTPA) of polymers along with another half million MTPA dedicated solely to chemicals.With approximately a 12% market share within India’s polymer sector—as highlighted by recent statements from ONGC—OPaL stands out prominently among competitors.

the government’s decision not only bolstered ONGC’s equity position but also enhanced OPaL’s financial health through improved capital structure metrics like debt-to-equity ratios.

Moreover, there are expectations that gaseous feedstock will be supplied by ONGC from newly allocated gas fields under nomination terms; however, this could come at prices potentially exceeding regulated APM gas rates by up to 20%.

References: Reuters