BP plans for future in support for bigger gas pipelines

Vol 10, PW 9 (24 Aug 06) People & Policy

BP is perhaps the only company that wholeheartedly supports the reservation of 33% additional capacity in gas transmission pipelines.

In talks with the ministry, BP agrees in principle with the concept of 33% over-build in pipeline capacity and making the same available on a non-discriminatory basis. BP agrees that, gas transmission pipelines should have infrastructure status as this would facilitate the development of transmission pipeline networks.

Says an industry source: Apart from the government, BP is the only company supporting this 33% reservation principle. This stand is tailor made to suit BPs position as a late entrant into the domestic gas business.

Today, BP has no transmission business in India. Nor does it have much else, but thats beside the point.

The point, as one analyst puts it, is this: They want capacity in transmission pipelines because if they enter the gas transmission business they will be doing so after everybody else. BP is clear that even gas pipelines for a specific consumer should be regulated and, in particular, no large aperture/capacity pipeline should be exempt from regulation.

BP justifies this on the ground that the phrase own capacity requirement in the draft policy could be misused by an existing bundled transmission and marketing company to secure customers and this would be against the principle of unbundling. According to BP, this allows monopolistic advantage to bundled companies which is against competition in the gas sector.

In a barely concealed reference to GAIL and GSPC, BP says unbundling should be done at the outset of the grant of authorisation for new transmission pipelines. BP also wants the pipeline policy to enshrine a clear arms length relationship between the authorised entity and its related E&P entity.

BP agrees with Gujarat Gas that city gas operators should have exclusive rights to customers because this would act as an incentive to operators to increase coverage of residential and other low load customers. As load factors in India are likely to be lower than in western countries, adds BP, exclusive access is necessary.