GAIL blocking HBJ access for other gas sellers

Vol 10, PW 5 (29 Jun 06) Midstream & Downstream

Its not yet official but we hear Gujarat State Petroleum has once again decided to fight its adversary GAIL head on.

How exactly By laying a 60-km gas pipeline from Talasari in the Thane district of Maharashtra on the Gujarat border right into Maharashtra traditionally a GAIL fiefdom. Until now,only GAIL haslaid gas transmission pipelines in Maharashtra and GSPCs move to encroach its territory will set alarm bells ringing.

PETROWATCH understands GSPC subsidiary Gujarat State Petronet has signed a deal with the newly set up Maharashtra Gas Transmission & Distribution Company to lay a gas pipeline (most likely 30-inch in diameter) to transmit natural gas to a massive industrial estate at Tarapur, site of several bulk drug manufacturing units, chemical manufacturing factories, steel plants and textile plants. GSPC is believed to have signed the document and sent it to Maharashtra authorities for their approval.

Only when both sides have signed the deal, will the project be formally announced. Hopes are alive within the Maharashtra Industrial Development Corporation that the arrival of gas from Gujarat will encourage construction of a Group Captive Power Plant for the Tarapur industrial area an idea studied in detail by consultants PWC for the MIDC and backed by new electricity legislation passed in 2003.

Estimates of gas demand among industries in the Tarapur industrial area range from 2m cm/d to 2.5m cm/d. Maharashtra energy minister Dilip Valse Patil visited Gandhinagar in the second week of June to discuss the project in detail with his Gujarat counterpart Saurabh Patel and GSPC managing director DJ Pandian.

When laid, the Gujarat Petronet pipeline into Maharashtra would be unprecedented, marking the first time a regional state-owned oil and gas company steps into a domain traditionally dominated by the likes of GAIL. Crucially, it also opens up Maharashtra as a new market for regassified LNG from the Shell terminal at Hazira and the Petronet-LNG terminal at Dahej.