No more domestic gas allocations for Gujarat

Vol 15, PW 3 (11 Aug 11) Midstream & Downstream

Two upcoming gas-fired power projects in Gujarat will have no alternative but to use expensive R-LNG as fuel.

PETROWATCH understands that oil minister Jaipal Reddy wrote to Gujarat chief minister Narendra Modi in July saying there’s not enough domestic gas available for any further gas allocations to Gujarat’s power sector. Reddy was responding to a letter he received in May from Modi requesting D6 gas to commission the first 351-MW unit of GSPC’s proposed 2100-MW Pipavav power project, built in partnership with Mumbai-based Swan Energy; and a proposed 195-MW expansion to the 156-MW Hazira power project promoted by GSPC sister company Gujarat State Energy Generation (GSEG).

This Hazira expansion is expected to be commissioned by September, while the Pipavav 351-MW unit is expected to be commissioned next year. Gujarat already gets more domestic gas for its gas-fired power stations than any other Indian state, nearly 13.8m cm/d.

But Modi loves to blame Delhi for not allocating enough domestic gas to Gujarat, which has the fastest growing economy in the country. Gujarat’s total installed electricity generation capacity is an impressive 13,354-MW, of which 31% is gas-fired.

Another 3000-MW of electricity generation capacity should be commissioned by March 31, 2012, of which a third will be gas-fired power. In India at large, the gas supply forecast for power stations is looking grim.

On July 8, the oil ministry called a meeting to get a better understanding of gas demand in the power sector, attended by representatives from ONGC, GAIL, IndianOil, Petronet-LNG, GSPC, and Shell. Ministry officials wanted details of current R-LNG supplies to different sectors, in addition to details of plans to expand re-gassification capacity at domestic LNG terminals.

This information was then forwarded to the Prime Minister’s Office (PMO) for review.