Editorial June 2024 Gail to Develop Ethylene Facility in Madhya Pradesh India

Rajiv Parikh

21 Jun 2024
GAIL to setup INR 60k Crore ethane cracker project in Madhya Pradesh. The land will be provided by MP Industrial Development Corp. The 800 hectares of land will be used for 1500 KiloTons per annum (KTA ) project and it also plans to develop a township of 70 hectares for the project. The production for commercial use will be starting from FY 30-31.

What is the Ethane Cracker project?

An ethane cracker is a large scale petrochemical facility that breaks down ethane into ethylene by superheating, which is the key chemical input for making plastics, adhesives, synthetic rubber and other petrochemicals.

What does this mean?

Ethelene is a raw material used in our daily lives from plastic bottles to antifreeze in your car or the clothes you wear. The chemical formula for Ethelene is C2H4. It is an industrial organic compound which has a significant impact on our daily lives. It is a colorless gas with a fruity odour and no odour in its pure form.

According to Commodity Insights report, cracker margins have averaged at $494.94 per metric ton. There has been a weaker demand since the pandemic and the European ethelene production is operating at around 70% to 75% as there is an oversupply of steam cracking capacity. GAILs investment in the project puts India as a competetive player in the global petrochemical market.

Ethylene is available in different purity grades and concetrations to meet the specific needs of different industries. This chemical compound is highly flamable, non-toxic and non-corrosive. It has a boiling point of -103.7 degree C. Ethane is mainly a natural gas which is available under the earth and sea bed. Major source of Ethane are natural oil and gas fields and gets seperated during steam cracking process

Using steam cracking, manufacturers turns ethane and naptha into various chemicals including Ethylene using extreme heating conditions around 750 degree celcius. In Asia and Europe, Naptha serves as a primary raw material for producing Ethylene while cracking Ethane can yeild more than 80% Ethylene and cracking Naptha can yeild around 30% of Ethylene. Ethane's growth as a raw material for Ethylene is the reason why, it is more in demand than Naptha and also due to it low relative cost, high Ethylene yield and less co-products while producing it.

Ethylene is flammable and it is the same gas which also helps in speeding up the ripenning of fruits including your everyday bananas, mangoes and tomotoes you eat and is used in agricultural products. It has its used in antifreeze, refrigeration and also as a fuel gas for industrial cutting and welding when mixed with Oxygen. Ethelene is used in the systhesis of Polyehylene which is a plastic widely used in packaging, construction and various other industries. Ethylene Oxide is used as a sterilizing agents and manufacturing of ethylene glycol which is used in medical and automotive sectors. Ethylene Benzene is used in synthesis of styrene which is used in production of plastics, rubber and resins. Ethylene Dichloride used to product vinyl chloride which is used in PVC pipes.

There are many major players in Ethylene production all around the world like Sinopec, LyondellBasell, Dow Dupont, Exxon Mobil Corporation, INEOS, Chevron Phillips, Braskem, Zhejiang Petrochemicals, PTT Global, Shell and many others and GAIL is working on the new manufacturing facility in Madhya Pradesh. Reliance Industries and Indian Oil Corporation operate Ethylene production facilities in India and ensure a consistent supply to meet domestic needs. Also GAIL Mangalore Petrochemicals plant which was acquired through the NCLT process (JBF Petrochemicals) is expected to be completed in 2025 which has a capacity of 1250 KTPA. According to OEC, in 2022 the top exporters of Ethylene were South Korea ($1.62B), United States ($1.22B), Netherlands ($1.13B), United Kingdom ($529M), and Japan ($368M). In 2022 the top importers of Ethylene were China ($1.94B), Belgium ($1.94B), Indonesia ($864M), Germany ($595M), and Chinese Taipei ($399M).


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