PROPANE SUPPLY AGREEMENT

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Context: GAIL (India) Ltd. has entered into a 15-year agreement with Bharat Petroleum Corp. Ltd. (BPCL) to supply propane for GAIL's upcoming petrochemical facility in Usar, Maharashtra.

Details

Agreement Details

• GAIL (India) Ltd. has signed a significant 15-year agreement with Bharat Petroleum Corp. Ltd. (BPCL).
• The agreement is valued at over ₹63,000 crore.
• Under this deal, GAIL will source 600 KTPA (thousand metric tonnes per annum) of propane from BPCL's LPG import unit located in Uran, Maharashtra.

BPCL LPG Import Unit Expansion

• BPCL's LPG import unit in Uran is currently equipped with a 1 MMTPA capacity.
• However, it is undergoing expansion to handle 3 MMTPA of propane and butane imports, likely to support the increased demand for propane supply to GAIL.

GAIL's Propane Dehydrogenation Unit

• GAIL is constructing a propane dehydrogenation unit in Usar, Maharashtra. This facility is notable as it is the first of its kind in India.
• The unit is expected to commence operations in 2025.
• It will have a nameplate capacity of 500 KTPA and will be seamlessly integrated into a polypropylene plant with an equal capacity for propylene production.

Polypropylene Demand

• The project aligns with the growing demand for polypropylene in the market. It is anticipated that the demand for polypropylene will reach 6.3 million tonnes by 2025, according to a statement by GAIL.

GAIL's Diversification Strategy

• This venture is part of GAIL's diversification strategy as outlined in its annual report for FY23.
• The company emphasizes that new business initiatives are central to its strategic outlook for enhancing profitability and expanding its market reach.

Propane ●Propane is a colourless and odourless hydrocarbon gas that is widely used as fuel for various applications. It is a versatile energy source known for its clean-burning properties and efficiency. ●It is commonly used in residential settings for heating homes and as a fuel for stoves, ovens, and other cooking appliances. ●It is utilized in agricultural machinery, such as tractors and irrigation pumps. ●It is commonly used for camping stoves, lanterns, and barbecue grills due to its convenience and portability. ●Propane is favoured for its environmental benefits, as it produces fewer emissions and pollutants when burned compared to other fossil fuels like coal and oil. It's considered a "clean" energy source. ●Propane is stored and transported in liquid form under pressure, which allows for efficient storage and transportation. When needed, it can be vaporized and burned to produce heat or power. ●The primary sources of propane production include natural gas processing and crude oil refining. Additionally, it can be produced from renewable sources, such as biomass and landfill gas, making it a more sustainable option.

 

PRACTICE QUESTION Q. How has India's renewable energy sector evolved in recent years, and what policies and initiatives are in place to promote its further growth and sustainability?