Truce between Gujarat Petronet and Gujarat Gas

Vol 8, PW 4 (19 May 04) Midstream & Downstream

Gujarat Petronet has decided to call a truce and resolve its transmission tariff dispute with British Gas subsidiary Gujarat Gas over the use of its 18-inch gas pipeline from Hazira to Ankleshwar.

We will honour our contract, a Gujarat Petronet source tells PETROWATCH. We dont want to walk out abruptly.

The Gujarat Gas-owned 73-km Hazira to Ankleshwar pipeline transports gas from the Hazira gasfield, owned by Gujarat Petroleum, parent of Gujarat Petronet. For the past eight months, Gujarat Gas and Gujarat Petronet have been locked in dispute over Gujarat Petronets demand that Gujarat Gas slash its transmission tariff to Rs0.08 per cubic metre from the Rs0.25 it charges now.

Surprisingly, Gujarat Petronet has decided to drop its demand. We are not happy but we will pay according to the contract.

Gujarat Gas has offered to reduce the annual transportation tariff to Rs21cr ($4.56m) and Gujarat Petronet is ready to accept. We realise that with the volume of natural gas increasing we might have to use the Hazira-Ankleshwar pipeline.

In 2000, Gujarat Petronet signed a five-year agreement with Gujarat Gas to transport 0.5m cm/d of gas from Hazira to Ankleshwar. Gujarat Gas felt threatened that once our Mora to Sajod pipeline is commissioned we would stop using its Hazira to Ankleshwar pipeline, he said.

We now feel that with the volumes of gas increasing we might not stop using their pipeline. Gujarat Petronet is expected to commission its 60-km, 24-inch Mora to Sajod pipeline in the next three months.

We will ensure that the Hazira to Ankleshwar pipeline does not become redundant. More, Gujarat Petronet hints it might be ready to extend its contract with Gujarat Gas till 2007.

After all we are in the same business, he adds.

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