GAIL accepts it is losing the battle for Tapti gas

Vol 8, PW 22 (09 Feb 05) People & Policy

GAIL is slowly beginning to realise it has lost the battle for Tapti gas.

At a meeting in the oil ministry on 4th February, oil secretary Sushil Tripathi repeated that the consortium of British Gas, ONGC and Reliance that operates Tapti would be allowed to sell its gas independent of GAIL from 1st April this year. A source at the meeting between Tripathi, GAIL marketing director UD Choubey, BG country chief Nigel Shaw and ONGC director offshore NK Mitra tells us that the secretary was critical of GAILs unacceptable approach in finding a solution to the row.

Tripathi offered the consortium two options: sell Tapti gas to GAIL at commercial rates; or bypass GAIL and sell it direct to customers at commercial rates. Tripathi stressed that if the consortium decided the latter, it could use GAIL infrastructure (HBJ) to transport the gas.

Sensing defeat, Choubey asked Tripathi to ensure that gas supplies to GAILs power and fertiliser customers would not be cut off if the consortium stops supplying GAIL. Tripathi agreed, and directed the consortium to ensure that supplies to GAILs existing customers are not cut off.

Another important point discussed was the (market) price at which the consortium would sell Tapti gas. A source confirms that Tripathi had no objection to the possibility of pricing Tapti using regassified LNG from Dahej as a benchmark, something GAIL too is also considering (see below).

We learn that Tripathi time and again repeated that the consortium is free to market its own gas from 1st April and that it would be allowed to use GAILs infrastructure to bring gas to customers. More, it appears Tripathi did not take kindly to a GAIL press release issued on 21st January stating that GAIL is seeking government intervention to solve the Tapti dispute.

GAILs request for intervention reached him after the press release was issued, reveals a ministry source. He is not happy with GAIL about this.