State-run gas utility Gas Authority (India) Limited has signed a Memorandum of Understanding (MoU) with Indian Oil Corporation Limited (IOCL) to explore possibility of setting up a Rs 10,000 crore petrochemical plant at Barauni in Bihar.

Under the arrangement, a joint working committee consisting of two representatives from each company shall be formed for undertaking techno-economic feasibility study of the project including feedstock (naphtha and natural gas) management.

According to sources, the proposed chemical plant will use 2,50,000 tonne 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.