No one will buy ONGC gas until the rules change

Vol 20, PW 3 (20 Oct 16) People & Policy

ONGC's tender offering 11,500 cm/d from the Pundi gasfield in Tamil Nadu will flounder unless the oil ministry changes its gas sales guidelines for small, isolated fields to better reflect market conditions in southern India.

KEI-RSOS Petroleum & Energy was the only company to attend the pre-bid at the ONGC office in Karaikal in Puducherry on October 5 even though more than 20 companies attended ONGC's pre-tender seminar/customer meet on April 18 in a hotel at Trichy in Tamil Nadu. Besides KEI-RSOS, Sri Varahi Chemicals is the only company to buy one of the tender documents, on sale from September 7 till November 3.

Why the poor response? Unlike northern and western India, gas-based industrialisation has yet to take hold in southern India because of the lack of commercial gas from domestic fields and the absence of LNG terminals. Many were also put off by tender conditions that the winning bidder must take a minimum 2000 cm/d within 90 days of the LoA.

"It's not possible in this timeframe for established factories to get official clearances and physically change their production system to begin using gas as fuel," we hear. "And it's out of the question to set up a new factory within 90 days." Instead, say sources, there should be at least a one-year window for drawing first gas.

This is the case for fields in north-eastern India. Bids are due by November 3.