New Delhi: India’s state-run Oil and Natural Gas Corporation (ONGC) has entered into a strategic agreement with Japan’s Mitsui O.S.K. Lines (MOL) to build and operate two Very Large Ethane Carriers (VLECs). The pact, signed on July 3, 2025, aims to ensure a steady supply of ethane for ONGC Petro additions Ltd. (OPaL), its petrochemical subsidiary.
Ethane Imports to Support Petrochemical Operations
Under the agreement, ONGC and MOL will jointly develop, own, and operate the vessels. Each carrier will have a capacity of 98,000 to 150,000 cubic meters of ethane. These carriers will transport approximately 800,000 tonnes of ethane per year starting in May 2028. The imports will support OPaL’s dual-feed cracker facility at Dahej in Gujarat, which relies heavily on ethane as a raw material. The estimated cost of building each vessel stands at around $185 million.
Joint Venture Structure and Investment Plan
The partnership will operate as a joint venture, with ONGC holding a minimum 26% equity stake and an option to increase it to 50%. MOL will own the remaining share. Both companies will collaborate on financing, shipyard selection, and exploring government incentives to facilitate the construction and deployment of these specialized carriers. As the demand for reliable petrochemical feedstock grows, this venture reflects ONGC’s proactive shift toward securing long-term logistics capabilities.
Shift Triggered by LNG Supply Changes
Historically, ONGC extracted ethane from “rich” LNG imported from Qatar. However, starting May 2028, India’s LNG contract with Qatar will transition to “lean” LNG, which no longer includes ethane and propane. This change has compelled ONGC to explore alternative routes to ensure a consistent ethane supply for its downstream operations. According to The Economic Times, this deal underscores a strategic evolution in how energy companies align shipping logistics with feedstock security.
A Strategic Move to Enhance Supply Chain Control
By investing directly in ethane carriers, ONGC is moving closer to controlling its entire supply chain. This includes everything from offshore extraction to petrochemical production. This not only secures feedstock delivery for OPaL but also positions ONGC to reduce long-term import risks associated with volatile global shipping markets. The VLECs will operate under long-term charters with OPaL, ensuring stable cargo movement between international ethane suppliers and Indian ports.
Awaiting Final Board Approvals
The deal is currently awaiting board approvals from both ONGC and Mitsui O.S.K. Lines. Once cleared, the partners are expected to finalize contracts with shipyards and begin construction promptly to meet the 2028 delivery timeline. As global demand for ethane transport grows, the ONGC-Mitsui alliance gains importance. It marks a key step in strengthening India’s petrochemical infrastructure.
