Poaching customers from Gujarat Gas

Vol 14, PW 8 (07 Oct 10) Midstream & Downstream

BG subsidiary Gujarat Gas had better watch out.

There’s a new kid on the block, ready to lure away its frustrated customers. PETROWATCH learns importer Petronet-LNG, hoping to maximise its LNG sales, is directly marketing gas to cloth mills and chemical factories in Surat and Ankleshwar in south Gujarat, both traditional Gujarat Gas fiefdoms.

PETROWATCH learns a Petronet-LNG team met representatives from the influential industrial lobby group South Gujarat Textile Processors Association in Surat on September 25 to make its case. Lobby group president Pramod Chaudhury and colleagues heard presentations from Petronet-LNG vice president finance RK Garg and Rajender Singh, operations chief at the Dahej LNG terminal and the future Kochi LNG terminal.

“Petronet-LNG took the initiative and called us to fix the meeting,” says Chaudhary. “This was an ‘introductory’ sort of meeting.

” He adds Petronet-LNG said it would study the local market in greater depth. Still unclear is how Petronet-LNG will supply gas ‘directly’ to these south Gujarat factories, but indications are it could use the area to test its embryonic LNG ‘hub’ concept (see below).

The bigger question is this: will Petronet-LNG be circumventing promoter companies GAIL, IOC and BPCL who usually market term R-LNG supplies from Dahej “We specifically asked Petronet-LNG if it is in a position to supply to end consumers,” says a textile mill owner, who attended the September 25 presentation. “They responded clearly by saying they have the oil ministry’s full backing.

” Details aside, Chaudhary welcomes Petronet-LNG’s move. “I don’t know whether they’ll bring in spot or short-term cargoes to supply R-LNG to us,” he adds.

“But taking gas directly from Petronet-LNG will be cheaper for us as we would eliminate at least two layers of middlemen.” In this case the ‘middlemen’ would be GAIL, BPCL or IOC as Dahej R-LNG wholesalers, and Gujarat Gas as the retailer.