CNG supplies to Agra are likely to dry up by August

Vol 11, PW 4 (28 Jun 07) Midstream & Downstream
     

CNG supplies to Agra, home of the famous Taj Mahal, could soon dry up unless state-owned Green Gas secures more gas.

Green Gas, a joint venture between Indian Oil and GAIL, has been selling CNG from three stations in this city of around 1.4m inhabitants since April 2006. But consumer enthusiasm for CNG has seen demand outstrip supply, and Green Gas is selling double its contracted amount.

“I hope GAIL and IOC do everything to ensure that the CNG stations don’t run dry from August,â€‌ we hear. “They will not let that happen.

â€‌ In the last quarter Green Gas signed a sales contract with IOC for 10,000 cm/d of R-LNG from Dahej, which is due for renewal. This roughly translates to 7500-kg CNG per day.

“Green Gas is drawing almost 20,000 cm/d, which is double what it contracted,â€‌ says a source. “It can’t go on like this.

Green Gas might have to buy R-LNG from spot cargoes.â€‌ Unpalatable as a solution, Green Gas is convinced that buying â€کspot’ R-LNG will make its CNG business unviable.

“If Green Gas sells CNG from â€کspot’ R-LNG, it will be priced at a minimum Rs40 per kg,â€‌ adds a source. “Who will buy CNG from us at this price It is not viable.

We can’t compete with diesel at this price.â€‌ Under its IOC contract, Green Gas pays around $6.50 per mmbtu, enabling it to sell CNG at the pump for Rs32 per kg.

For help, Green Gas is demanding more subsidised gas from the government. Specifically, it wants 100,000 cm/d for a minimum five years for each of the five cities where it has a licence to operate: Agra, Lucknow, Kanpur and Bareilly.

One argument for special treatment is that Agra is home to the Taj Mahal, an internationally recognised heritage monument, which is under threat from pollution. By August, Green Gas will have laid a 9-km eight-inch steel pipeline to supply gas to luxury five-star hotels near the Taj, most of which use diesel generators.

“Once the pipeline is ready,â€‌ adds a source, “we can supply environmentally friendly gas.â€‌