Oil-to-chemical plants are part of ONGC's energy transition strategy

7 Aug 2023 , 01:08 AM

The country’s largest oil and gas producer, ONGC, plans to build two oil-to-chemical plants in India to transform crude oil directly into high-value chemical products as it gets ready for the global energy shift, according to chairman Arun Kumar Singh. 

One of the main energy sources is crude oil, which businesses like ONGC extract from underground reservoirs and the seabed. In oil refineries, it is processed to create jet fuel, diesel, and petrol. 

Companies all around the world are exploring innovative ways to use crude oil as the world looks to move away from fossil fuels.

Detergents, fibres (polyester, nylon, acrylic, etc.), polythene, and other items are made using petrochemicals, which are chemical compounds obtained from crude oil.

‘The demand for petrochemicals is expected to remain strong and will continue to be a key driver of oil and gas demand in the future,’ Singh stated in the company’s most recent annual report. ‘ONGC is working with other organizations to investigate the potential in the oil to chemical (O2C), refining, and petrochemicals sectors with this goal in mind. Additionally, we want to build two new O2C facilities in India.

The company already operates petrochemical facilities at Mangalore in Karnataka and Dahej in Gujarat through its two subsidiaries, Mangalore Refinery and Petrochemicals Limited and ONGC Petro-Additions Limited.

Oil and Natural Gas Corporation (ONGC) stated in the 2022–23 annual report that ‘MRPL and OPaL are strongly engaged in the diversification plan from oil to the petrochemical sector.’ In order to investigate the potential in the oil-to-chemical and oil-to-petrochemical industries, ONGC is also collaborating with other parties.

According to the International Energy Agency (IEA), as more commercial cars adopt alternative drive systems and as electric vehicle adoption rises, demand for fossil fuels will peak by 2030. Thus, energy companies all around the world are considering alternatives.

With the use of crude oil-to-chemicals (COTC) technology, crude oil can be directly transformed into high-value chemical products rather than conventional transportation fuels. Compared to the 10% produced by a non-integrated refinery complex, it allows the production of chemicals to reach 70% to 80% of the barrel-providing chemical feedstock.

The bulk of COTC plants that are currently in operation or have been proposed are in China and the Middle East. Plans for a COTC plant have been unveiled by Saudi Aramco and SABIC. The facility will use 400,000 barrels of Arabian Light crude oil per day to process around 9 million tonnes of chemicals annually.

In order to achieve net zero carbon emissions by 2038, Singh stated that ONGC will invest Rs 1 lakh crore in energy transition projects by 2030.

As part of the country’s commitment to addressing the climate crisis, the company collaborates with other state-owned oil and gas companies Indian Oil (IOC), Hindustan Petroleum (HPCL), GAIL, and Bharat Petroleum (BPCL) in developing roadmaps towards net zero emissions.

Achieving net-zero status for a business entails striking a balance between the quantity of greenhouse gases it emits and the quantity it absorbs.

In 2022–2023, the corporation stopped the downward trend in oil and gas production, and it is now trying to increase output with projects on both the East and West coasts.

In 2022–2023, ONGC produced 19.584 million tonnes (MT) more oil than the previous year (19.545 MT). The output is anticipated to increase to 21.525 MT in 2024–25 and 22.389 MT in the next fiscal, from the current fiscal’s 21.263 MT (April 2023–March 2024).

The projected increase in natural gas output is 20.636 billion cubic metres (bcm) in 2022–2023 to 23.621 bcm in 2023–2024, 26.08 bcm in 2025–26, and 27.16 bcm in 2026–2027.

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