Bhagyanagar forced to seek R-LNG to meet demand

Vol 15, PW 26 (12 Jul 12) Midstream & Downstream

Distressed Andhra Pradesh factories and businesses desperate for gas have forced Hyderabad-based Bhagyanagar Gas to look for R-LNG.

Gas demand is soaring in Hyderabad, Vijayawada and Kakinada where the GAIL-HPCL joint venture operates. Bhagyanagar receives only 100,000 cm/d of domestic gas from ONGC, allocated by the oil ministry: 45,000 cm/d is sold in Hyderabad; Vijayawada gets 50,000 cm/d and Kakinada gets 5000 cm/d.

“Bhagyanagar is drawing its entire gas allocation,” says a source. “Demand from industrial and commercial customers is phenomenal.

” Bhagyanagar, he adds, is hoping to secure R-LNG from GAIL and other companies who plan to set up Floating Storage and Regasification Units (FSRUs) along the Andhra coast by 2014-15. If it gets gas at $10/mmbtu, we are told, Bhagyanagar can easily increase sales fourfold to 400,000 cm/d in Hyderabad; to 200,000 cm/d in Kakinada; and 100,000 cm/d in Vijayawada.

“Kakinada ceramics manufacturers want gas connections and want them yesterday,” we hear. “They burn rice husk or diesel as fuel but want to replace this with gas.

” In Hyderabad, factories manufacturing car parts and engineering goods, and biscuit manufacturers, have set up along Bhagyanagar’s steel pipeline grid in the hope of getting gas. But it has only completed a 16-inch diameter, 30-km steel pipeline, besides setting up 15 CNG stations and one city gate station.

It has also been forced to rein in ambitious plans to lay a 250-km steel grid, set up 50 CNG stations, and provide gas connections to 150,000 households by 2016.