GAIL rejoices in gas bonanza from ONGC

Vol 6, PW 10 (17 Jul 02) Midstream & Downstream

Gloomy faces are a thing of the past at GAIL's LPG extraction facility at Usar near Mumbai, thanks to a surprise but unexplained increase in gas supply from ONGC since 4th July.

Right up to last month GAIL was panicking about sharply dwindling supplies for Usar and had drawn up plans to relocate the facility to the Krishna Godavari basin. To general relief, that plan is now shelved.

"We will wait and watch for at least three months," a GAIL source tells us. "We hear that improved supplies could continue for another two years." Shifting to the Krishna Godavari basin was a last resort.

"It would not have been easy," he adds. "CAG (the feared national auditor) would have asked why the Usar investment was made in the first place.

A lot of project managers at GAIL and Engineers India would have been in trouble." GAIL's Rs320cr ($66m) Usar facility was set up to process 5m cm/d into 422 tonnes of LPG. Operations began in August 1998 but the most it ever received was 4.7m cm/d, and that was in1999.

Supplies began to dwindle from then. "ONGC kept telling us gas is depleting and they could do nothing about it." In private GAIL suspects ONGC of first extracting LPG for itself at Uran and then passing on leftover lean gas to GAIL, which is helpless without a clearly-worded contract.

"Six months ago they told us the future was getting bleaker and no gas would be available after 2004." Most critical has been the period from January to now when Usar could only extract LPG for four days in a month, but with ONGC supplies up, the situation should now improve.