ONGC Partners with Japan’s Mitsui to Develop Ethane Carriers

India’s state-owned Oil and Natural Gas Corporation (ONGC) has signed a strategic agreement with Japan’s Mitsui O.S.K. Lines (MOL) to jointly develop, own, and operate two Very Large Ethane Carriers (VLECs). The vessels will support ethane imports for ONGC Petro additions Ltd. (OPaL), the company’s petrochemical arm, ensuring a stable feedstock supply for its Dahej complex in Gujarat.

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Ethane Supply to Support Petrochemical Operations

Under the pact, each VLEC will have a capacity between 98,000 and 150,000 cubic meters, and will transport approximately 800,000 tonnes of ethane annually starting May 2028. These imports are critical for OPaL’s dual-feed cracker, which depends on ethane as a core raw material. The cost of building each carrier is estimated at $185 million.

Joint Venture and Investment Structure

The project will be structured as a joint venture, with ONGC holding a minimum 26% stake, with the option to increase up to 50%. MOL will retain the remaining equity. Both companies will collaborate on shipyard selection, project financing, and the potential utilization of government incentives to support the vessel construction and deployment process.

This partnership marks a strategic step by ONGC to strengthen its logistics and supply chain infrastructure amid rising demand for petrochemical feedstocks.

Shift Prompted by Changes in LNG Supply

Historically, ONGC sourced ethane by extracting it from “rich” LNG imported from Qatar. However, beginning May 2028, India’s long-term LNG agreement with Qatar will shift to “lean” LNG, which excludes ethane and propane. This shift has prompted ONGC to secure alternative ethane sources and dedicated shipping capacity to support its downstream operations.

As reported by The Economic Times, the agreement reflects ONGC’s evolving strategy to link shipping logistics directly with feedstock security.

Enhancing Control Over Supply Chain

By investing directly in VLECs, ONGC aims to secure greater control over its ethane logistics—from global procurement to delivery at Indian ports. This move not only mitigates exposure to global shipping market volatility but also ensures long-term feedstock reliability for OPaL’s operations. The vessels will operate under long-term charters with OPaL to ensure steady cargo movement from global ethane suppliers.

Final Approvals and Timeline

The agreement is currently subject to board approvals from both ONGC and MOL. Once approved, the two companies will proceed with finalizing contracts with shipyards and begin construction to meet the 2028 delivery timeline.

This initiative highlights ONGC’s commitment to strengthening India’s petrochemical infrastructure and adapting to changing global energy dynamics.