PY-1 production

Vol 15, PW 4 (25 Aug 11) News in Brief

Eni-subsidiary Hindustan Oil Exploration Company (HOEC) has resumed production at its offshore Chennai PY-1 gasfield.

PETROWATCH learns HOEC shut down production at PY-1 between July 10 and August 17 because sole customer and independent power producer PPN Power was not taking gas for its 330-MW ‘combined cycle’ power station in Tamil Nadu’s Nagapattinam district. PPN in turn did not take gas because its sole customer, state-owned Tamil Nadu Electricity Board (TNEB), did not issue ‘load despatch’ instructions asking for electricity.

A TNEB source explains that even though there is a power shortage in Tamil Nadu, it can only buy electricity from the cheapest available source at any given time. “Sometimes PPN’s power is the costliest, so we don’t take it,” he says.

PPN has been buying 1.18m cm/d of gas from PY-1 since November 2009. It is paying $3.75/mmbtu which will rise to $3.85/mmbtu from November and again rise in two years to $3.95/mmbtu.