Delay in GTA between Gujarat Petronet and Shell

Vol 6, PW 13 (28 Aug 02) Midstream & Downstream

DESPITE PROGRESS AT Hazira, Shell has missed a self-imposed target of 15th August to sign a Gas Transmission Agreement with Gujarat State Petronet.

We understand Gujarat State Petronet - a subsidiary of Gujarat State Petroleum - has not yet approved the agreement and that it's directors did not discuss the GTA when they met in July. Ostensibly this was because Gujarat energy secretary Manjula Subramaniam insisted on more time to read the small print but we understand the real reason is because of tension between Subramaniam and GSPC managing director D.

J Pandian. In Gujarat's bureaucratic hierarchy, Subramaniam is Pandian's boss.

Shell is not worried at the delay, and remains quietly confident that Gujarat chief minister Narendra Modi's "personal interest" in the matter will see it through. Modi, it appears, wants the project to go through fast "Gujarat State Petronet directors will formally discuss the draft GTA this month," reveals a source confidently.

"It will be signed in the first week of September." When signed, the GTA will last for 20 years, allowing Gujarat State Petronet to transport Shell's regassified LNG through its pipeline grid for a transmission tariff of between 15-20 cents per mmbtu. In contrast, claims Gujarat Petronet, GAIL will charge a transmission tariff of between 40-50 cents per mmbtu for Dahej LNG.

Shell and Gujarat State Petronet are confident they have a winning formula. "Our tariff for delivered gas will be much lower than Petronet-LNG."