Why ONGC is locking 600 KTPA of ethane at Petronet LNG’s Dahej terminal for 15 years

Petronet LNG Limited has entered a 15-year agreement with Oil and Natural Gas Corporation Limited to develop and provide ethane unloading, storage, and handling services at the Dahej terminal in Gujarat. The binding term sheet was signed on December 3, 2025, and outlines a long-term capacity reservation of approximately 600 KTPA by Oil and Natural Gas Corporation Limited, with operations expected to begin between October and December 2028.

This agreement marks a major expansion for Petronet LNG Limited beyond its traditional LNG regasification services. By investing in ethane infrastructure, the company is positioning itself to play a critical role in India’s petrochemical logistics supply chain. Over the course of the 15-year contract, Petronet LNG Limited expects to generate gross revenue of ₹5,000 crore from this deal. The agreement aligns with Oil and Natural Gas Corporation Limited’s downstream strategy to secure consistent feedstock supply for its subsidiary, ONGC Petro Additions Limited, which operates one of the largest ethylene crackers in India.

What makes the Dahej third jetty a transformational asset for India’s feedstock imports

Petronet LNG Limited is currently developing ethane-specific infrastructure at its Dahej terminal, including a dedicated ethane storage facility with an approximate capacity of 170,000 cubic meters. Alongside this, the company is constructing a third jetty that will be capable of handling ethane, propane, and liquefied natural gas shipments. This new jetty will be the first of its kind in India that enables multi-product marine logistics at a single terminal.

The project is designed to provide unloading, storage, and re-delivery capabilities for ethane imported by Oil and Natural Gas Corporation Limited or its subsidiaries. Once operational, the Dahej terminal will become a critical logistics node for both public and private petrochemical players seeking import flexibility. Petronet LNG Limited has indicated that the infrastructure will be open to third-party usage, a move that could attract polymer producers, specialty chemical firms, and energy players that require scalable feedstock supply solutions.

This infrastructure expansion reflects Petronet LNG Limited’s broader strategic ambition to diversify beyond liquefied natural gas and become a full-spectrum energy and petrochemical logistics provider.

Why ONGC is betting on long-term ethane imports to power its downstream ambitions

The 15-year capacity booking by Oil and Natural Gas Corporation Limited is closely tied to the feedstock needs of ONGC Petro Additions Limited, its downstream subsidiary based at Dahej. ONGC Petro Additions Limited operates a large-scale ethylene cracker designed to process imported ethane, producing ethylene, propylene, and other polymer-grade chemicals for domestic and export markets.

Oil and Natural Gas Corporation Limited plans to import ethane using Very Large Ethane Carriers, each with a capacity of about 100,000 cubic meters. Ethane will be procured through a mix of long-term contracts, short-term supply deals, and spot market transactions. By securing infrastructure access through Petronet LNG Limited’s ethane facilities, the upstream oil and gas producer can ensure a stable supply of feedstock for its petrochemical operations.

The petrochemical complex run by ONGC Petro Additions Limited currently produces approximately 1,100 KTPA of ethylene and 400 KTPA of propylene, along with chemicals such as benzene and butadiene. The complex supports India’s push to reduce polymer imports and build a globally competitive petrochemical base.

How the deal strengthens Petronet’s LNG diversification and downstream ambitions

Petronet LNG Limited is India’s leading liquefied natural gas regasification player, with a portfolio that includes two major terminals at Dahej, Gujarat and Kochi, Kerala. The company manages around two-thirds of the country’s total liquefied natural gas imports and operates 43 percent of India’s regasification capacity. With turnover of around ₹51,000 crore in financial year 2024–25, Petronet LNG Limited has long been a core part of the country’s energy security framework.

The company is now expanding its scope by integrating ethane and propane import capabilities into its infrastructure. The ethane terminal and third jetty at Dahej are part of a wider investment plan that includes setting up a propane dehydrogenation unit with a capacity of 750 KTA and a polypropylene plant of 500 KTA at Dahej. These projects are expected to position Petronet LNG Limited as a major player in India’s growing downstream chemicals and petrochemical value chain.

In parallel, Petronet LNG Limited is also developing a greenfield liquefied natural gas terminal with a capacity of 5 MMTPA on the east coast at Gopalpur, Odisha, signaling its intention to extend its infrastructure reach beyond western India.

What third-party access to Dahej’s infrastructure could mean for India’s petrochemical ecosystem

The fact that Petronet LNG Limited plans to open its ethane and propane infrastructure at Dahej to third-party users is likely to attract interest from domestic and global chemical producers. India’s limited domestic ethane production has long been a bottleneck for companies planning to build or scale ethylene crackers. By providing reliable marine access and storage capacity for imported ethane and propane, Petronet LNG Limited could help enable a new wave of private and joint venture investment into petrochemical manufacturing.

The third jetty and USH (unloading, storage, and handling) infrastructure could act as an anchor for co-located chemical parks, integrated logistics zones, or value-added export clusters along the Gujarat coast. For India to remain cost-competitive in polymers and other petrochemical exports, logistical costs and import flexibility will be key. Petronet LNG Limited’s ability to offer multi-product, scalable infrastructure at one of the country’s most active energy ports gives it a strong advantage in capturing this demand.

This also aligns with broader policy objectives, such as the Indian government’s target of doubling polymer consumption by 2030 and reducing reliance on imported intermediates.

How the ONGC–Petronet relationship plays into governance, transparency, and strategy

Oil and Natural Gas Corporation Limited is not just a customer in this arrangement; it is also one of the original promoters of Petronet LNG Limited and holds a 12.5 percent equity stake in the joint venture. In addition, the Chairman and Managing Director of Oil and Natural Gas Corporation Limited sits as a nominee director on the board of Petronet LNG Limited.

Despite this close relationship, Petronet LNG Limited has clarified that the transaction was executed on an arm’s length basis, in full compliance with related party regulations under the SEBI LODR framework. The announcement filing also emphasized that the term sheet will serve as a base document for definitive future agreements between the parties.

The formal signing took place at Oil and Natural Gas Corporation Limited’s corporate office in New Delhi and was attended by Shri Arun Kumar Singh, CMD of ONGC, and Shri Akshay Kumar Singh, MD and CEO of Petronet LNG Limited. Analysts tracking the institutional side of the sector view the move as a positive example of coordinated public-sector strategy and long-term infrastructure planning.

How investor sentiment is shifting around energy logistics and feedstock security

Petronet LNG Limited’s stock has remained stable in recent trading sessions, closing around ₹250 per share. While the immediate impact of the deal may not trigger sharp movement, analysts believe the ethane diversification strategy enhances the company’s long-term growth profile. Institutional flows remain steady, with domestic mutual funds maintaining exposure while foreign institutional investors have shown renewed interest following announcements about capital expansion and infrastructure development.

Oil and Natural Gas Corporation Limited, on the other hand, has seen a modest uptick over the last five sessions, buoyed by stable global crude prices and its integrated expansion into petrochemicals. The company is expected to benefit from margin resilience across upstream and downstream segments, especially with feedstock availability now partially secured through the Dahej arrangement.

Brokerage houses remain broadly neutral to positive on both firms, with a bias toward hold ratings for Petronet LNG Limited and a selective buy stance on Oil and Natural Gas Corporation Limited based on crude outlook and domestic policy support.

How will India’s petrochemical expansion accelerate after 2026 as ethane import capacity comes online at Petronet LNG’s Dahej terminal

India’s ethane import infrastructure is still in its infancy, with most ethylene crackers relying on naphtha or mixed feedstocks. The agreement between Petronet LNG Limited and Oil and Natural Gas Corporation Limited could signal the beginning of a structural shift, particularly if more players enter the ethane market via shared access to Dahej facilities.

Analysts believe that Petronet LNG Limited’s decision to offer multi-product port infrastructure with third-party access is a key differentiator that could unlock new business models, including tolling, feedstock-as-a-service, and logistics arbitrage for integrated chemical players.

As polymer demand rises and petrochemical complexes proliferate across western and southern India, the ability to import ethane at scale could offer India a cost advantage in global export markets. Petronet LNG Limited’s diversification strategy places it in a strong position to benefit from this tailwind.

What are the key highlights from Petronet LNG’s 15-year ethane logistics deal with ONGC?

• Petronet LNG Limited has signed a 15-year binding term sheet with Oil and Natural Gas Corporation Limited for ethane unloading, storage, and handling (USH) services at Dahej, Gujarat.

• The agreement reserves 600 KTPA of ethane import capacity for Oil and Natural Gas Corporation Limited and will commence operations between October and December 2028.

• Petronet LNG Limited will generate approximately ₹5,000 crore in revenue over the contract’s duration, marking a strategic shift into petrochemical logistics beyond its core LNG regasification business.

• A third jetty at the Dahej terminal, under construction, will enable handling of ethane, propane, and liquefied natural gas, making it India’s first multi-product marine energy terminal.

• Oil and Natural Gas Corporation Limited will import ethane using Very Large Ethane Carriers to meet the feedstock needs of its subsidiary ONGC Petro Additions Limited, which operates a major ethylene cracker at Dahej.

• The agreement enables ONGC Petro Additions Limited to secure long-term feedstock, supporting its capacity to produce over one million tonnes of ethylene annually.

• Petronet LNG Limited plans to open the infrastructure to third-party users, potentially transforming Dahej into a national hub for imported petrochemical feedstocks.

• Petronet LNG Limited is also building a 750 KTA PDH and 500 KTA PP unit at Dahej, alongside developing a new 5 MMTPA LNG terminal at Gopalpur, Odisha.

• The deal was executed on an arm’s length basis, despite ONGC being a promoter and related party, and involved senior leadership from both entities during the signing.

• Investor sentiment remains neutral to positive, with Petronet LNG Limited shares stable near ₹250 and Oil and Natural Gas Corporation Limited showing modest strength, supported by petrochemical expansion visibility.