The high-level Indian mission to Iran may have failed to secure natural gas at cheaper rates, but a headway was achieved in the petrochemicals sector. Gail India and National Petrochemical Company of Iran have decided to set up a gas cracker unit in Iran.

Gail executives said the gas cracker would require an investment of Rs 8,000-10,000 crore (Rs 80-100 billion). "GAIL may make an investment of about Rs 1,500 crore (Rs 15 billion) in the gas cracker if the participation is on a 50 per cent basis," said an executive.

A memorandum of understanding on the proposed project was signed on November 24 in Tehran.

The $2.5-billion NPC is one of the largest producers in the world of a variety of petrochemical products with a current capacity of 18.5 million tonnes per annum. It is targeting a capacity of 40 mtpa and a turnover of $20 billion by 2015.

Gail, which runs a petrochemical plant at Pata in Uttar Pradesh, is expected to pick up 50 per cent equity in the Iran project, though the exact extent of participation will be finalised after the preparation of a project report.

Gail may bring in the products for sale in the domestic market, subject to overall market requirements.

The two companies would mainly focus on gas crackers. Other options, like methanol plants and styrene butadiene rubber plants may also be examined.

The two companies have also agreed to consider and evaluate other opportunities, like a methanol plant in the South Pars zone and its extension to an olefin plant. The two sides would undertake an upfront study on this project.

Sources said that during the visit of senior officials of the petroleum ministry, Gail and Indian Oil Corporation executives last week, Gail had expressed interest in polypropylene and gas to liquid projects.

The petrochemical projects will be predominantly gas-based. The two companies will undertake feasibility study for a gas cracker based on ethane and propane recovered from the South Pars field.