ONGC forays into Urea Fertilizer Business
Dated : 15 April 2013 10:14:33 PM
Oil and Natural Gas Corporation Limited (ONGC), in its pursuit of achieving significant non E&P business growth integrated with its mainstay of E&P business - as envisioned in its bold Perspective Plan for the year 2030, took the first step into fertilizer domain by inking of a Memorandum of Understanding (MoU) with M/s Chambal Fertilisers and Chemicals Ltd. (CFCL) and the Government of Tripura for setting up a urea fertilizer project in the State.
ONGC has discovered significant gas reserves in Khubal under NELP acreage AA-ONN-2001/1, located in the logistically challenging north-eastern part of the state of Tripura, which otherwise would be stranded due to poor marketing and evacuation avenues. Therefore, monetization of this gas would be a challenging proposition. At the same time, the progressively minded State Government is keen on rapid industrial and agricultural development of the State to address the aspirations of its people. In sequel to setting up of ONGC’s gas based power project at Palatana, Tripura through a JV with the State Government, joint venture fertilizer project augurs well with the development agenda of the state administration and the business growth plans of ONGC and its strategic partner M/s CFCL. Identification of M/s CFCL as a strategic partner for this venture was through a transparent selection process on the basis of their long-standing experience and expertise in the fertilizer sector.
Investment opportunity in fertilizer is ripe on more than one account. The new Fertilizer Policy 2012 has several enabling provisions to encourage further investments in the urea fertilizer arena. The gas based fertilizer complex would need allocation of natural gas by the Empowered Group of Ministers (EGoM), Govt. of India, for meeting its feedstock requirement. Since fertilizer ranks topmost in the priority for allocation, the parties are optimistic about getting the requisite gas allocation.
It is estimated that a commercial scale urea fertilizer plant having 1.3 MMTPA of urea capacity would utilize 2.4 MMSCMD of gas and entail an investment to the tune of Rs. 5,000 crores.
The State Government of Tripura has also assured necessary support by way of assistance in creation of infrastructure, availability of water and for evacuation of the fertilizer produced from the project. In addition, the commitment of the Government of Tripura is also exhibited through its evinced interest in taking 10% equity in the joint venture company to be set up for implementation of the proposed project.
A formal MoU signing ceremony was held at Agartala on 9th April 2013. The occasion was graced by Sh. Manik Sarkar, Hon’ble Chief Minister of Tripura. Sh. Sudhir Vasudeva, CMD-ONGC, Sh. S. K. Panda, Chief Secretary, Govt. of Tripura, Sh. K S Jamestin, Director (HR & BD), ONGC and Sh. Abhay Baijal, Chief Financial Officer, CFCL, dignitaries and other functionaries from the State administration, ONGC and M/s CFCL were also present on the occasion.
ONGC and M/s CFCL also have plans to take their joint collaboration further ahead through prospective projects in other geographies. Therefore, the success of Khubal fertilizer project draws great significance in the growth ambition of both the parties, besides its importance to the state of Tripura.
Oil and Natural Gas Corporation Ltd.
Corporate Communications, New Delhi,