Oil India offers 300,000 cm/d Jaisalmer gas

Vol 25, PW 12 (19 May 22) Midstream, Downstream, Renewables

Despite its high nitrogen content, Oil India is confident that city gas retailer AG&P and others operating in Rajasthan will show interest in up to 300,000 cm/d gas on offer from its Jaisalmer PML in the Rajasthan desert.

On May 4 (2022), Oil India invited EoIs by June 30 (2022) for 200,000 to 300,000 cm/d of gas from the Tanot, Dandewala and Bagitibba fields inside the 250-sq km Jaisalmer PML with the first supplies slated to begin between July and December 2022. Oil India wants to assess local gas demand before ramping up production and stressed to interested parties that it expects to sign 15-year supply contracts.

"AG&P will most likely be interested in this EoI," predicts an Oil India source. "Other gas retailers in Rajasthan are Torrent, Adani, Indraprastha Gas, IndianOil and Hindustan Petroleum; they might also be interested."

AG&P is by far the favourite because of the size of its city gas area. On September 28 (2018), the PNGRB issued Singapore-incorporated AG&P LNG Marketing Pte Ltd the CGD licence for an 89,900-sq km expanse covering the Barmer, Jodhpur and Jaisalmer districts of Rajasthan under CGD-IX.

AG&P committed to building 80 stations dispensing CNG and providing 551,000 piped gas connections to households by September 27 (2026). Oil India's offer is commercially attractive when compared to expensive spot R-LNG.

Despite hiking the sale price cap for onland gas from $2.9/mmbtu to $6.10/mmbtu on March 31 (2022), the government's quarterly revised price is still cheaper than spot R-LNG. Oil India already supplies between 500,000 cm/d and 600,000 cm/d of gas from Jaisalmer to its anchor customer, a 270.50-MW gas-based power plant at Ramgarh, located 60-km away.

"Jaisalmer has the potential to produce 1m cm/d gas," adds our Oil India source. "In November (2019), the oil ministry gave us the go-ahead to increase production, but we need to increase our gas processing capacity before supplying downstream customers."

Oil India clarifies that if Ramgarh gas demand falls for any reason, such as when gas turbines 'trip' (fail) or during maintenance, more gas will be available for other customers.