The Telegraph
Thursday , August 21 , 2014
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RIL plants to use US feedstock

Mumbai, Aug. 20: Reliance Industries’ bet on shale gas exploration in the US is finally paying off.

On Tuesday, RIL said it would start importing 1.5 million tonnes a year of ethane from the US from 2016 to feed its gas crackers in India.

In a filing with the bourses, RIL said ethane had become the dominant feedstock for crackers replacing liquids.

The $74.5-billion behemoth said its crackers portfolio in India was a “natural fit” to the ethane sourced from North America, which would ensure long-term feedstock competitiveness.

The decision is expected to benefit the oil giant in terms of not only allowing it more flexibility in sourcing feedstock for its petrochemical plants but also bringing down raw material costs, thus improving margins.

Ethane is a component of natural gas and found in large quantities in Marcellus Shale in Pennsylvania and Eagle Ford in Texas — the two shale formations where RIL has invested.

The company said while it had invested in overseas shale gas assets, the import of ethane would enable it to obtain long-term feedstock competitiveness.

“Reliance has now executed storage and capacity agreements for liquefaction and export of ethane with a North American Terminal, which is expected to commence operations in the second half of 2016,” it said.

For transporting liquefied ethane to India in a safe and cost-efficient manner, Reliance has ordered six very large ethane carriers. The ships are expected to be delivered in the last quarter of 2016 by when the North American terminal will be ready.

Reliance is also building a receiving and storage facility in India for liquefied ethane and pipeline to deliver ethane to its crackers.

The company is also planning to upgrade its crackers to maximise the cracking of ethane, have maximum operational flexibility and capability to optimise feed stocks.

Sources at RIL did not comment from where the 1.5 million tonnes will be sourced.

“There is no fixed seller from where this ethane will be sourced. It will depend on the price of the feedstock,” the source added.

Recently, the US lifted a 40-year ban on export of certain commodities, including crude condensate, an unprocessed form of crude oil. It remains to be seen whether RIL will take advantage of this relaxation and import this feedstock as well.