Offshore Technology

Daily Newsletter

07 August 2023

Daily Newsletter

ONGC to set up two oil-to-chemical facilities in India

To minimise its carbon footprint, ONGC aims to invest Rs1trn ($12.08bn) in green initiatives by 2030.

India’s Oil and Natural Gas Corporation (ONGC) is looking to set up two oil-to-chemical facilities in the country.

The proposed facilities will convert crude oil into chemical products as the state-backed company tries to pivot towards an energy transition.

To minimise its carbon footprint as part of efforts to reach net-zero emissions by 2038, ONGC aims to invest Rs1tn ($12.08bn) in green initiatives by 2030.

In the company’s latest annual report, ONGC chairman Arun Kumar Singh said: “Petrochemicals demand is expected to remain strong and will continue to be a key driver of oil and gas demand in the future.

“With this objective, ONGC is collaborating with other entities to explore opportunities in the oil to chemical (O2C), refining and petrochemicals. We are also planning to set up two greenfield O2C plants in India.”

Petrochemicals, which are chemical compounds obtained from crude oil, are used in the production of detergents, fibres, polythene and other materials.

The company already operates petrochemical facilities at Mangalore in Karnataka and Dahej in Gujarat through its two subsidiaries, Mangalore Refinery and Petrochemicals Limited (MRPL) and ONGC Petro-Additions Limited (OPaL).

“MRPL and OPaL are strongly engaged in the diversification plan from oil to the petrochemical sector,” ONGC said in its report.

The company is also seeking partnerships to examine prospects in the O2C and oil to petrochemicals sectors, it added.

As economies around the world move to transition to net zero, oil companies such as ONGC are looking for ways to use their crude oil, reported PTI via the Hindu Business Line.

According to the International Energy Agency, petrochemicals are quickly taking over as the main factor driving the world's oil demand.

ONGC hopes to take advantage of this trend by increasing its chemical and petrochemical portfolio from the current level of 4.2 million tonnes per annum (mtpa) to 8mtpa by 2030.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.