Reliance Industries will import 1.6 million tonnes of ethane from the US in the current fiscal to replace natural gas and naphtha as feedstock at its petrochemical plants, a senior company official said today. Use of ethane, a natural gas component that is expected to be produced in large volumes in North America after the shale gas revolution, will reduce company’s petrochemicals feedstock cost by about 30 per cent, RIL COO for Petrochemicals Business Vipul Shah told reporters here. The company has begun receiving consignment or cargo of ethane from US. Very Large Ethane Carriers (VLECs) are used to transport liquefied ethane from the US to the Gujarat Chemical Port Terminal Company Ltd terminal at Dahej, Gujarat.
“RIL has become the biggest importer of ethane from USA in 2017,” he said, adding that using ethane would increase its petrochemicals operating profit by USD 300 million a year. The company has contracted ethane supplies for more than 20 years from US, said Amit Mehta, head of gas business at RIL. RIL uses 2.5 million tonnes a year of naphtha as feedstock in petrochemical crackers and ethane would reduce its use by 500,000 tonnes, which can be exported. Ethane will be used as feedstock for RIL’s crackers in Dahej and Hazira in Gujarat and Nagothane in Maharashtra. RIL sees 200,000 tonnes per annum increase in ethylene output from these crackers from ethane use.
Shah said the company has invested USD 1.6 billion in ethane business so far which include ships, pipeline and port infrastructure. The investment, he said, can be recovered in less than four years. The company imported 416,000 tons of ethane, amounting to total of 9 VLEC cargoes, which is 19 per cent more than the second biggest importer of ethane from U S, INEOS. While Ineos imports ethane from Marcus Hook, Pennsylvania and Morgans Point terminal, Houston, India. RIL has an ethane supply contract in place with Enterprise Product Partners out of their Morgan’s Point terminal in the US Gulf coast, he said.
Total US exports till May have been about 0.9 million tonnes, out of which exports to RIL is about 48 per cent. Other importers like Ineos, Sabic, Braskem and Borealis constitute the remaining 52 per cent. RIL has two joint ventures in Pennsylvania’s Marcellus Shale — one with Chevron Corp, in which it has invested USD 1.7 billion, and another with Houston-based Carrizo Oil & Gas Inc, in which it has invested USD 392 million. It has a third JV, in which it invested USD 1.5 billion, in Texas’ Eagle Ford Shale group with Dallas-based Pioneer Natural Resources Co.
RIL had in 2014 ordered building of six Very Large Ethane Carriers (VLECs) at Samsung Heavy Industries Pvt Ltd’s shipyards in Korea.
Two of these vessels, named Ethane Crystal and Ethane Emerald, were delivered last year. Japan’s biggest shipping company Mitsui OSK Lines Pvt Ltd will manage and operate the ships for RIL. Ethane is expected to be produced in large volumes in North America due to the shale gas revolution, which has generated an abundance of liquefied natural gas (LNG) and liquefied petroleum gas (LPG). It is primarily used as a petrochemical feedstock to produce ethylene by steam cracking.