Implications of Reliance discovery on gas imports
UNTIL NOW, NO one ever seriously considered that India could produce enough domestic gas to satisfy demand.
Reliance's discovery has turned that assumption on its head. Ambani's announcement to shareholders, while lacking in detail, is clear in ambition: "We would strive to deliver about 40m cm/d to consumers in three to four years." Take a deep breath, step back and reflect.
40m cm/d That's half India's gas production of 81.3m cm/d last year (See chart). Is Reliance serious Given the company's reputation, you'd be foolish to think otherwise.
"If Reliance needs to build a gas pipeline to Gujarat and Mumbai because that's where the market is," says a source with close knowledge of the company, "then that's what they'll do." OnlyReliance knows how it will develop the field or indeed if all the talk is just bluff. Yet imagine for a moment the company holds its promise to begin delivering 40m cm/d by 2006.
Where does that leave competing LNG or gas pipeline projects Nowhere. IOC's plan to set up an LNG facility at Kakinada with BP and Petronas is as good as dead.
Eclipsed also is the need for gas from Bangladesh and Unocal's proposed pipeline. Another pipeline from Iran promoted by BHP Billiton would not leave the drawing board and Reliance would need to seriously rethink its own alliance with BP and Iran to develop LNG from South Pars for Jamnagar.
Only Dahej and Hazira would be a threat. By 2006, Petronet-LNG and Shell would have cornered much of the market and Reliance's only question then would be: can we poach their customers with cheaper KG gas