Challenge for GAIL as IOC constructs gas pipelines

Vol 8, PW 11 (25 Aug 04) Midstream & Downstream

Indian Oil is challenging GAIL in the gas pipeline construction business.

IOCs enthusiasm stems from the 103-km gas pipeline from Baroda to Kalol through Ahmedabad that it built for Gujarat State Petronet. In the next few weeks IOC hopes to sign an agreement with Gujarat Petronet to lay a 340-km stretch from Mora in Gujarat to Uran in Maharashtra a pipeline that will compete directly with GAILs proposed 504-km gas transmission pipeline from Dahej to Uran.

The market for crude and product pipelines is shrinking, an IOC source tells us. Gas pipelines are threatening product pipelines.

Industry is switching to gas. IOC believes its decision to move into the gas pipeline business is prudent.

We are the only company with experience of over four decades in laying pipelines across the country, he said. Instead of petroleum products or crude well now transport gas.

IOC points out that it was the first company to carry out a feasibility study for a gas pipeline from Kakinada on the east coast to Ahmedabad. The project was not pursued because of uncertainty about our LNG terminal at Kakinada.

Gujarat Petronets proposed Mora to Uran pipeline will be constructed in two stages but with IOC as the EPC contractor for the entire project. The first stage will see a 130-km pipeline from Mora to Talasari, an industrial town on the Gujarat side of the border with Maharashtra.

This stretch will be part of our intra-state gas grid, he said. In the second stage, IOC will own and construct another 210-km pipeline from Talasari to Uran.

Total cost of the entire pipeline is about Rs435cr ($95m). The 24-inch pipeline is designed to carry 12m cm/d of natural gas, exactly the same capacity as GAILs proposed Dahej to Uran pipeline.

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