GSPC gets clearance for Punj dispute pipeline

Vol 17, PW 13 (13 Feb 14) Midstream & Downstream

GSPC is one crucial step closer to producing gas from its Deen Dayal West field after receiving environmental clearance for a 20-inch diameter, 24.5-km subsea section of pipeline at the centre of a payment dispute with Punj Lloyd.

Last month (January) oil minister Veerappa Moily cleared the remaining stretch of the Deen Dayal pipeline in his additional capacity as environment minister, despite party politics that held up approval since last April. India's Congress-party led government was loathe to clear the project as GSPC is the pet company of Gujarat chief minister Narendra Modi, the BJP prime ministerial candidate in forthcoming general elections.

GSPC needs the pipeline to pump gas from its offshore discovery to the onshore gas terminal at Mallavaram. A well-placed source says the only obstacle to Deen Dayal West gas production is the unresolved compensation dispute between GSPC and pipeline laying contractor Punj Lloyd.

Punj is demanding $123m in standby charges for the year-long delay in laying the 24.5-km sub-sea pipeline as GSPC waited on clearances. A Punj source says the firm continues to work on the Deen Dayal West pipeline but has ceased work on the section passing beneath the Neelarevu River bed until the compensation payment matter is resolved.

“Talks with GSPC are going on,” he says. Punj was awarded the Rs826cr ($133m) pipeline contract in 2011.

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