Japanese shipping firm Mitsui O.S.K. Lines will operate two very large ethane carriers (VLECs) for Oil and Natural Gas Corporation (ONGC) to import petrochemical feedstock for a subsidiary of the state-owned company, according to sources.

ONGC has entered into a partnership to build, own and operate the two VLECs. The two firms are currently discussing the equity structure of the joint venture, sources with direct knowledge of the matter said.

Mitsui is expected to hold a majority stake in the ships, which will be constructed at Korean shipyards, although the final equity structure will depend on ONGC’s preferences, the sources added.

The specialised ships, with an estimated cost of USD 370 million for both vessels, are aimed at securing petrochemical feedstock for ONGC Petro Additions Ltd’s (OPaL) facility at Dahej. Ethane imports are expected to begin around mid-2028. It would take approximately two-and-a-half years to build the carriers.

Mitsui and its partners currently operate four liquefied natural gas (LNG) ships for Petronet LNG Ltd, India’s largest LNG importer, and six ethane carriers for Reliance Industries Ltd.

The ONGC board is set to decide on the final partnership arrangement.

ONGC plans to begin importing ethane in mid-2028 to offset the altered composition of LNG sourced from Qatar, as outlined in a tender floated in March this year to select a partner for constructing the VLECs.

India imports 7.5 million tonnes per annum of LNG from Qatar. Under the agreement, QatarEnergy supplies 5 million tonnes per year of LNG that includes methane — used for electricity generation, fertiliser production, compressed natural gas or cooking fuel — as well as ethane and propane, which serve as feedstock for LPG and petrochemicals. The remainder is supplied on a best-effort basis.

This contract is set to conclude in 2028. A revised agreement signed last year specifies that QatarEnergy will supply ‘lean’ gas, stripped of ethane and propane.

ONGC had earlier invested about Rs 15 billion in establishing a C2 (ethane) and C3 (propane) extraction plant at Dahej in Gujarat. The extracted C2/C3 was used as feedstock for its petrochemical arm, OPaL. With the LNG composition change, the company now intends to import ethane.

OPaL “is a mega grassroots petrochemical complex and boasts the largest standalone dual-feed cracker in Southeast Asia. The plant processes a mix of naphtha and C2 (ethane), C3 (propane) and C4 (butane) as feedstock,” the tender document stated. “ONGC plans to source and supply 800,000 tonnes per annum of ethane to secure feedstock for OPaL from May 2028 onwards.”

To ship this ethane, ONGC has formed a joint venture with Mitsui to build VLECs that will transport the feedstock. ONGC will source the ethane and hire the carriers from the joint venture.

ONGC built the C2/C3 extraction unit at Dahej in Bharuch district of Gujarat in 2008–09. However, its subsidiary OPaL only commissioned the petrochemical plant in 2017. Until then, the extracted compounds from imported LNG were sold to Reliance Industries-owned IPCL, pending the establishment of its polymer plant.

The C2-C3 plant has a handling capacity of 4.9 million tonnes per annum of LNG. The OPaL complex includes a 1.1 million tonne per annum ethylene-capacity dual-feed cracker, along with associated units and polymer plants for manufacturing HDPE, LLDPE, PP and styrene butadiene rubber.