GAIL/ONGC fight over gas dehydration costs

Vol 19, PW 1 (10 Sep 15) News in Brief

GAIL and ONGC are embroiled in a bitter cost dispute over a gas dehydration programme to prevent corrosion and potential explosions in its steel transmission pipelines.

Under oil ministry instructions ONGC must install gas dehydration units at its E&P assets with costs shared equally by GAIL. But in mid-August ONGC complained to GAIL saying it should replace all its steel pipelines with plastic ones.

“Why can't GAIL switch to plastic pipelines?” asks an ONGC source. “Water in gas streams destroy pipelines and results in accidents.

” From September 10, Deep Industries will begin dehydrating gas for ONGC at four installations in Rajahmundry under a Rs3.5cr/year ($526,000) contract won in June. ONGC must install five more units at Rajahmundry, five in Gujarat, three in Tripura, and five at Karaikal.

GAIL isn’t happy about ONGC’s demand. "Why should we replace a pipeline before it is damaged?" exclaims a senior GAIL official.

"Plastic pipes are double the price of steel pipes."