New Delhi: After teaming-up with Reliance Industries, state-run gas utility GAIL India today signed an agreement with refiner Indian Oil Corp to explore possibility of setting up a Rs 10,000-crore petrochemical plant at Barauni in Bihar.

The proposed chemical plant will use 2,50,000 tons of naphtha produced by IOC's Barauni refinery and the natural gas that GAIL plans to bring from eastern offshore and imported LNG through the planned Jagdishpur-Haldia pipeline.

"We (GAIL and IOC) have today signed a memorandum of understanding (MoU) for exploring the possibility of setting up of cracker complex including downstream derivatives at Barauni," GAIL Chairman and Managing Director U D Choubey told reporters after inking the agreement here.

The two firms by the fiscal year would prepare a techno- economic feasibility study for the unit that would take up to five years for construction.

"Naphtha prices in India and world-over are on a downturn. It is selling below fuel oil (price) as demand is not there. We are forced to export naphtha and the proposed unit will enable us to extract value from the fuel," IOC Chairman Sarthak Behuria said.

Project structure and equity participation has not yet been decided. "It could be a 50:50 joint venture between GAIL and IOC... It may also be a public-private partnership," Choubey said indicating that the alliance had room to induct a strategic partner.

A 130-km spur line from Gaya to Barauni would be laid to transport gas to Barauni fertiliser plant, IOC's refinery and the proposed petrochemical unit. GAIL s Jagdishpur-Haldia pipeline would transport gas found in eastern offshore.

Source : PTI