Two gas pipelines from Andhra to Gujarat not required

Vol 12, PW 19 (26 Feb 09) Midstream & Downstream

Does India need two pipelines bringing offshore KG gas from Andhra Pradesh to Gujarat Some think not! GSPC pipeline subsidiary Gujarat State Petronet is under fire for its plans to lay a second â€کEast to West’ gas pipeline that will compete with the brand new 48-inch diameter 1400-km Reliance Industries owned transmission pipeline that should begin flowing D6 gas any day now.

“I don’t understand why Gujarat Petronet wants to lay its own pipeline!â€‌ says an industry source. “Reliance already has an â€کEast to West’ pipeline.

Why can’t they use thatâ€‌ Gujarat Petronet’s determination to lay its own pipeline, argue observers, is even more bizarre given that Reliance has set aside 33% of its pipeline capacity under the â€کcommon carrier’ principle for use by other companies. “Reliance has spent Rs15,000cr ($3bn) to Rs16,000cr ($4bn) on its pipeline,â€‌ he adds.

“Who will pay for the excess capacity that has been built into this pipelineâ€‌ A source with a power company based in Andhra Pradesh is more direct and predicts Reliance will sabotage the laying of a competing pipeline. “Reliance will fight tooth and nail to stall this pipeline,â€‌ he claims.

Our source cites the minutes of the Empowered Group of Ministers meeting held on January 8 to discuss supplies of D6 gas. “Gas supplies from D6 should start dwindling from 2017 to 2020,â€‌ he adds.

“What will happen to the Reliance pipeline after thatâ€‌ Undeterred, Gujarat Petronet is pressing ahead with its plans and last month formally asked the Petroleum and Natural Gas Regulatory Board to authorise a 1250-km pipeline from Mallavaram in Andhra Pradesh to Bhilwara in Rajasthan so it can transport gas from its KG Basin discovery, which it expects to start flowing by late 2011. On January 21, the Board published a notice on its website inviting comments from the public or companies that want to â€کbook capacity’ within 30 days.

So far no one has shown any interest.