GAIL forced to use Gujarat Petronet pipelines

Vol 6, PW 19 (20 Nov 02) Midstream & Downstream

GAIL IS FAST realising that Gujarat Petronet controls the pipeline sector in Gujarat.

Unless the oil ministry intervenes Gujarat Petronet looks a sure victor in this emerging pipeline war. Gujarat State Petroleum, Gujarat Petronet's parent company, has clearly told GAIL that it will only issue NOCs for the Dahej-Bijaipur stretch if GAIL agrees to use Gujarat Petronet's pipeline network to transport the gas.

Gujarat Petronet is quick to deny blackmail. "We are only pleading with them to use our pipeline network," a source tells us.

"We are already transporting 3m cm/d gas in Gujarat. Our pipeline can move LNG from Dahej and (Shell's) Hazira terminal." Gujarat Petronet claims logic and ground realities back its case.

"We are laying a pipeline from Hazira to Dahej to Baroda. We are now only 8-km short of Dahej.

We have already set up a pipeline network in Gujarat. We told GAIL we're perfectly competent to transport LNG within Gujarat and that they should take it outside Gujarat." Gujarat Petronet is telling GAILnot to waste its resources in Gujarat and instead "play a larger, national role." Gujarat Petronet has another argument.

"GAIL is laying its (Dahej-Bijaipur) pipeline at a cost of Rs5cr per kilometre. Our pipeline costs between Rs1.8cr and Rs2cr per km.

Our tariff in Gujarat will be much cheaper." GAIL's proposed pipeline is 42-inch diameter;Gujarat Petronet's line is 24-inch diameter. Gujarat Petronet says the lower diameter is enough to transport LNG from Hazira and Dahej.

"We will install compressors to push in more LNG," adds a source. "If need be we can lay a loop line later.

Even then it will be cheaper." GAIL is charged with shipping the entire quantity of 17.5m cm/d gas from Dahej.