Mumbai: Oil and Natural Gas Corporation (ONGC), the country''s largest oil producer, is making a big foray into petrochemicals. The oil giant will invest Rs17,000 crore ($3.7 billion) to set up a petrochemical complex in Mangalore. The complex will have a capacity of one million tonnes per annum.

Work on the project is in progress although a function to lay the foundation stone by Prime Minister Manmohan Singh was postponed due to bad weather on Friday.

"We would be investing Rs17,000 crore at the petrochemical complex here," R S Sharma, ONGC chairman and managing director, said.

The project includes a Rs4,900 crore aromatic complex and a Rs12,000 crore olefins complex. While the aromatic complex will be completed in three years after selection of the process licensor and engineering partner, state-owned Engineers India Ltd has been asked to prepare a detailed feasibility report for the olefin complex.

ONGC proposes to execute the project through a special purpose vehicle (SPV). ONGC will hold 46-per cent stake in the SPV while its subsidiary Mangalore Refinery and Petrochemicals Ltd will have three per cent. The balance 51 per cent will be with financial institutions and banks.

MRPL, meanwhile, is expanding its naptha production capacity from 9.69 million tonnes to 15 million tonnes per annum, at an estimated cost of Rs8,000 crore, Sharma said.

The two projects are part of ONGC''s planned investments of over Rs35,000 crore in Mangalore''s Special Economic Zone, which will house a new 15-million-tonne refinery, LNG and petrochemical units and a power plant.