Reliance talks to Gujarat Petronet about Rajasthan

Vol 9, PW 26 (20 Apr 06) Midstream & Downstream

Reliance, Gujarat State Petronet and Rajasthan state authorities have begun talks to jointly lay a gas transmission network.

PETROWATCH learns that, preliminary discussions have already begun. A decision is still some time away on who will hold how much equity but discussions have so far been encouraging given the strong synergies between Reliance and Gujarat State Petronet in the gas transmission business in Gujarat, which is next door.

Gujarat Petronets pipeline from Surat (Hazira) is already supplying gas to fertiliser cooperative IFFCO at Kalol and plans are to extend this line by another 50-km to Mehsana, near the Rajasthan border. The pipeline to Mehsana will be ready by September 2006, we learn.

For its part Reliance is planning a pipeline from Kakinada in Andhra Pradesh to Gujarat to supply NTPCs power stations at Kawas and Gandhar. Reliances pipeline will come to Surat which is a hub for gas from Hazira, we are told.

From Surat, Reliance or GSPC gas can be transported to Rajasthan by a single pipeline. Plans are to lay a 500-km transmission line in Rajasthan, we are told.

In the future, 500-km will be nothing in comparison to the national grid thats being planned. Reliance and Gujarat Petronet have also sought No Objection Certificates from Rajasthan authorities to set up city gas distribution networks in Jaipur, Alwar and Jodhpur.

Gujarat Petronet has considerable expertise running a transmission and distribution network in Gujarat, says a source. And Reliance will lay a gas pipeline to Gujarat.

Adds our source: Shells Hazira terminal is a source very close to Rajasthan for Gujarat Petronet. The combination of Reliance, Gujarat Petronet and the Rajasthan government will be a formidable player in the states transmission and distribution business.

Another observer adds that Gujarat Petronets parent company GSPC and Reliance are even open to offering Rajasthan a 26% stake in the venture. The idea is to find out the best way to leverage the strengths of players who have recently emerged in the oil and gas industry.

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