GAIL desperate to implement Dahej to Uran pipeline

Vol 8, PW 18 (01 Dec 04) Midstream & Downstream

GAIL seems desperate to implement its Dahej to Uran gas pipeline project at any cost and is making all efforts to convince the oil ministry that the project is sound and viable.

Documents presented to a 5th November meeting of the GAIL board aim to prove that the company has all necessary commitments from gas suppliers to justify construction. However, close examination of these papers by this report reveal that the commitments from British Gas, Shell, ONGC and Petronet-LNG are anything but firm.

At best, they can be termed as preliminary contacts that GAIL has established with these companies. Take ONGC.

On 9th September, ONGC supplied GAIL with information on future gas availability from its C-series structures nothing more. GAIL has projected this as confirmation of availability of 1.5m cm/d of gas to feed into the pipeline.

Ditto with British Gas. In a letter dated 1st December 2003, BG tells GAIL that there is a proposal to increase production from these fields from August 2004 and we will keep you informed as to progress.

Nowhere is there any mention of a commitment to supply gas to GAIL from the South Tapti gasfields. Likewise GAIL produces a 26th August letter from Shell which states that Shell Hazira Gas Private Limited is willing to discuss the possibility of selling regassified LNG to GAIL at a price and on terms and conditions that are reflective of the prevailing international market.

There is no mention of the subsequent conversation that Shell India chairman Vikram Singh Mehta had with oil ministry officials where he rules out supply of Hazira gas for the Dahej to Uran pipeline. Only Petronet-LNG offers something resembling a commitment in the form of a draft MoU.

But here too Petronet-LNG says it is constrained by shipping capacity.