Calcutta, Jan. 29: Oil and Natural Gas Corporation (ONGC) plans to set up a gas extraction plant at Dahej in Gujarat at an investment of Rs 900 crore to produce LPG from liquefied natural gas (LNG). Chairman Subir Raha said the project will beef up the company’s bottomline.

“The board has already approved the project and work will start soon,” Raha said adding that the project will be completed in the next two years.

The Dahej terminal, promoted by Petronet LNG, will be fully operational in the next financial year and will have a capacity of five million tonnes.

Petronet LNG is a joint venture in which, besides ONGC, Indian Oil, Gail, BPCL, Gaz de France and ADB are partners. The first consignment of LNG — around 140,000 million cubic metres — is reaching Dahej by a ship called Disha today.

“While the other partners in Petronet LNG like Gail, Indian Oil and Bharat Petroleum will market the imported LNG, we will have the right to extract LPG and petrochem feedstock from the LNG,” Raha said.

Raha said ONGC plans to go with the project on its own and the investment would be funded through internal accruals. Once production starts, ONGC will have to pay 15 cents per tonne as royalty to Petronet LNG.

On the forthcoming IPO, Raha said the issue will remain open between March 2 and 9 and the price band would be decided one day prior to that.