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State-run Oil and Natural Gas Corp. Ltd (ONGC) will invest up to 6,000 crore in petrochemicals arm ONGC Petro additions Ltd (OPaL) to meet its equity requirements, a top executive said.

“We have already got compulsorily convertible debentures (CCDs) in OPaL. We would be converting them into equity worth 6,000 crore," said a senior ONGC official.

OPaL’s net profit during the second quarter stood at 1.19 billion. The company is a joint venture promoted by ONGC and GAIL (India) Ltd, and co-promoted by Gujarat State Petroleum Corp. Ltd (GSPC).

OPaL has set up a 1.1-MMTPA (million metric tonne per annum) greenfield petrochemicals complex at the Dahej SEZ in Gujarat.

ONGC had been planning to induct a strategic partner in OPaL for many years, but due to lack of interest from investors, the plans were shelved.

Till 2019, ONGC was in talks with Saudi Arabia’s Saudi Basic Industries Corp. (Sabic) and Saudi Aramco for selling a 26% stake in OPaL.

The stake sale process did not go ahead; so, ONGC decided to make OPaL a subsidiary. The company is now planning to merge OPaL with itself.

“Merging OPal with ONGC is an option and deliberations are under process," the official added.

Till December 2020, ONGC had infused capital in the form of warrants ( 3,365 crore) and provided support for CCDs ( 7,778 crore), taking ONGC’s stake to 92% in OPaL with the company planning to further increase its equity stake in OPaL.

OPaL, which has a $4.5 billion petrochemicals project, began operations in 2016-17 and has been ramping up production in phases. OPaL’s complex houses India’s largest greenfield single-location, dual-feed cracker unit. The company primarily manufactures polymer, a chemical compound used in various products ranging from textiles to plastics.

OPaL’s petrochemicals complex is part of the forward integration plans of ONGC.

The majority feedstock for OPaL is currently being sourced from ONGC. The naphtha requirement is met by the processing plant of ONGC at Hazira and Uran.

“Given the increasing demand for petrochemicals, we see contribution from petrochemicals to increase (in ONGC’s topline). We may integrate OPaL into ONGC eventually. This is under process though," an ONGC official said.

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