Torrent asks GAIL for 500,000 cm/d PMT gas now

Vol 11, PW 25 (01 May 08) Midstream & Downstream

Torrent Power and GAIL are deadlocked over a request by the Gujarat-based electricity generation company for immediate supplies of 500,000 cm/d gas from the Panna, Mukta and Tapti oil and gasfields for its 100-MW power plant at Vatva, an industrial suburb of Ahmedabad.

Torrent’s surprise request comes amid ongoing talks for 900,000 cm/d, which GAIL has already agreed to supply for the first 387-MW block of Torrent’s proposed 1130-MW power plant near Surat, which Torrent expects to commission by June 15 this year. “Torrent has asked GAIL to start supplying 500,000 cm/d from this 900,000 cm/d (PMT gas) to Vatva until supplies begin to the Surat plant,â€‌ says a source.

“But GAIL is objecting saying it is not permitted to do this.â€‌ Torrent’s request for PMT gas to fire Vatva is not difficult to understand.

On average the company pays around $15/mmbtu for R-LNG to fire Vatva but would ideally like to pay $4.75/mmbtu – the price Torrent originally agreed with ONGC for PMT gas and which GAIL promises to retain. “Torrent is paying around Rs90 lakh ($1.4m) a day for gas at Vatva,â€‌ we hear.

“If it could receive PMT gas until mid-June it could save millions.â€‌ GAIL, however, is unimpressed and is telling Torrent it will refer the matter to the oil ministry unless it sticks to the original destination for its 900,000 cm/d from PMT: the upcoming 1130-MW power plant near Surat.

On April 29, Torrent wrote to GAIL, explaining its position, and calling for an â€کamicable solution’. “If this matter goes to the ministry,â€‌ warns a source.

“There will be more delay in signing the contract.â€‌ If GAIL backs down and agrees to the request, Torrent could begin receiving gas immediately.

In February 2006, the company signed a transmission agreement with Gujarat State Petronet for 4.95m cm/d to both Vatva and the Surat power plants. “GSPL’s pipeline from Hazira (landfall for PMT gas),â€‌ we hear, “is already in place to transport gas to Vatva.