State-owned gas utility GAIL on Friday said it has signed an agreement with Shell Energy India to explore ethane sourcing and other opportunities along the energy value chain.

In a statement, GAIL said it has signed a memorandum of understanding with Shell Energy India to “explore opportunities for infrastructure development for ethane sourcing”.

GAIL is planning to import ethane from the US to replace natural gas and naphtha as feedstock at petrochemical plants.

Last month it floated a tender to hire a very large ethane carrier (VLEC) for 20 years starting mid-2026 to import ethane from the US.

The ship with a capacity of 80,000 to 99,000 cubic metres will take deliveries from the US ports of Marcus Hook, Nederland, Morgan’s Point or Beaumont and deliver ethane at Dahej or Hazira in Gujarat or Dabhol in Maharashtra.

GAIL has a petrochemical plant at Pata, near Kanpur in Uttar Pradesh, and is also looking to set up another unit at Usar in Maharashtra.

The company had to cut down on the run rate at Pata after the government diverted gas supplies from the plant to city gas suppliers. This led to its profitability being impacted and so now the company is looking to supplement the feedstock with ethane.

“For GAIL, this is a step towards achieving improved sustenance in business operations,” the statement said.