GAIL excluded from Petronet-LNG deal with GSPL

Vol 7, PW 18 (19 Nov 03) Midstream & Downstream

Gujarat State Petronet has won a crucial victory in its ongoing war against GAIL for control of the Gujarat gas market.

On 24th October, the board of Petronet-LNG agreed to GSPLs long-pending request for 1m t/y regassified LNG from Dahej. Negotiations over price and other terms are still to be concluded but one thing is clear: GAIL will be excluded from the deal, even though it is the re-seller for 60% of regassified LNG from Dahej.

A source tells PETROWATCH that Gujarat State Petroleum GSPLs parent company made clear during informal talks that GAIL should not be involved. GSPL wants gas pumped directly into its own pipeline connected to Dahej, bypassing GAILs infrastructure.

GSPL told Petronet-LNG that their pipeline network is just 6.5 km away from Dahej, says our source. GSPL is knocking at our door.

With gas from Dahej in hand, GSPL has already placed orders for the remaining section of pipes to connect its pipeline directly to Petronet-LNGs tap-off point. If all goes to plan, GSPL will receive commercial supplies of regassified LNG from 1st April next year.

In July, GSPL submitted its first formal request for Dahej gas when GSPC managing director DJ Pandian wrote to Petronet-LNG seeking 1m t/y regassified LNG. Pandian told Petronet-LNG that GSPL has pipeline infrastructure in place to transport gas from the Hazira field and that the pipeline ends near Dahej.

Simultaneously, Gujarat chief minister Narendra Modi a leading light of Indias ruling BJP party wrote to oil minister Ram Naik in support of GSPLs demand. Naik took a political decision to agree to Modis request because of elections in four states later this month and general elections next year, adds a source.

Modi (accused by human rights groups of orchestrating an anti-Muslim pogrom in Gujarat) is the BJPs hottest election icon. Soon after Modis intervention, GSPL wrote to Petronet-LNG for a meeting to work out details.

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