ISPAT wants joint venture partner to develop gasfield

Vol 9, PW 13 (06 Oct 05) Midstream & Downstream

Not often do you hear of steel manufacturers owning a gasfield.

But thats the ultimate ambition of Mumbai-based ISPAT Industries, faced with dwindling gas supplies to its 2.4m t/y Hot Rolled Coil plant at Dolvi in the Raigad district of Maharashtra, 70-km south of Mumbai. Ultimately ISPAT must have its own gasfield, we learn.

Its the only way to ensure a consistent supply of gas at a consistent price. ISPAT, a listed company with profits last year of around Rs600cr on a turnover of Rs7, 000cr, is today actively scouting for a joint venture partner that can help it develop and operate a small gasfield.

Under scrutiny are several clusters of ONGC marginal fields in the Mumbai Offshore that received no bids in ONGCs last tender and for which ISPAT plans to bid when ONGC re-tenders in December this year. ISPAT would like a gasfield that can produce 2m cm/d or more and that is located within 500-km of its factories in Maharashtra.

It is confident that it will win a field and that ONGC will relax some of the terms in the next tender, given the poor turnout last time round. ISPAT is ready to assume responsibility for the construction of a gas pipeline to its factory.

ISPAT, owned by Pramod and Vinod Mittal, brothers of steel tycoon Lakshmi Mittal, is in a precarious position. Its factories need (and have been allocated) 1.75m cm/d to run at full capacity but the company only receives erratic supplies of between 600,000 cm/d to 800,000 cm/d from Bombay Offshore fields through GAIL, which is bound by law to supply priority fertiliser and power companies over non-priority companies like ISPAT.

By 1st November this year, ISPAT plans to increase Hot Rolled Coil capacity to 3.6m t/y, for which it will need additional gas. In two years ISPAT wants to expand capacity further to 5m t/y, we hear.

For this it will need a total 4m cm/d.