Indian steel and plastics manufacturer Essar is in talks with BASF about a $2 billion petrochemicals joint venture, the newspaper Economic Times reports. Quoting "people directly involved in the discussions," the paper said the link-up with the German group, world's largest chemical producer, "revives a diversification plan" that had been on the Indian company's back burner for some time, due to global considerations but also because of Essar's huge debt burden.

The company owned by billionaire brothers Shashi and Ravi Ruli is said to have long harboured a desire to be an integrated oil and gas major and had developed a blueprint for a refinery and petrochemical plant at Vadinar in India's Gujarat state.

Economic Times quotes sources as saying the plans include fluidized catalytic cracker and a propylene plant with an initial capacity of 1 million t/y along with downstream plans for polypropylene, plasticizers and absorbents, to provide competition for Indian petrochemicals giant Reliance.

The sources told the paper that it could take some time to realize the ambitious proposals. Although the highly indebted Essar was unable or unwilling to contribute capital, and BASF would have to finance the venture entirely.

Neither company has been willing to comment on the speculation. By its own account, in 2013 BASF had sales of €1.02 billion to customers in India. It employed 2,254 people at eight production sites and sales offices, along with two R&D centers.