Doubts over gas supply cloud Dahej to Uran pipeline

Vol 8, PW 13 (22 Sep 04) People & Policy

Shells decision will only heighten growing disagreement between GAIL and the oil ministry over the viability of its proposed 504-km gas pipeline from Dahej to Uran.

A senior ministry official this month accused GAIL of trying to push through the project without first securing a firm supply of gas and without any firm contracts for the sale of gas with potential customers. The proposal of GAIL (to finalise the tender for line pipes) should only be agreed when the requirement of sourcing of gas and proper marketing tie-up is achieved, he clamours.

GAIL wants to push through the agenda in a haste. The need to finalise the tender quickly is being cited as the reason for justifying the pipeline project.

In a searing indictment, the official demolishes GAILs claim of a secure gas supply source for the Dahej to Uran pipeline. On the possibility of supply from Shells Hazira plant, he writes: Negotiations between Shell and GAIL have failed.

No formal understanding has been reached between GAIL and Shell and no timeframe can therefore be put up to actualise this option. On supply from Petronet-LNGs Dahej plant, he writes: LNG from Dahej can only be available when the capacity of the terminal is increased from 5m t/y to 10m t/y.

If any quantity from the present (5m t/y) capacity is diverted this will mean under-utilisation of the HBJ and is not an option. On additional Tapti gas, he writes: The additional availability may be only 1.5m cm/d and this can be easily absorbed in Gujarat or on the HBJ.

We fail to understand how any quantity can be diverted when there is already a shortage of gas on the HBJ. In conclusion, the ministry believes: It is evident that GAIL has not been able to make the necessary tie-up for sourcing of gas, which is critical for taking up any pipeline project.

A greenfield pipeline with large investments cannot be justified on such uncertain assumptions as GAIL has made.

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