GAIL and ONGC row over LPG production

Vol 5, PW 23 (16 Jan 02) Midstream & Downstream

They might be state-owned companies, but ONGC and GAIL are bitter rivals when it comes to marketing gas.

Witness their simmering row over LPG in Maharashtra. GAIL has an LPG recovery plant near Mumbai at Usar, set up with an investment of Rs320cr ($66.66m) to produce about 422 tonnes a day of LPG.

It receives gas from ONGC's Uran field via a 41-km pipeline. For the past six months ONGC has been supplying 3m cm/d against the contracted quantity of 5m cm/d, claiming ashortfall of gas production from its Uran field.

GAIL is unconvinced. "ONGC has set up its own LPG extraction unit at Uran and doesn't want to supply us gas," reveals a senior source.

"Our plant at Usar is operating at 25% capacity." Now we learn ONGC is telling GAIL it won't be able to supply gas beyond January. And GAIL is seriously worried! "Usar is a matter of serious concern for us." Will GAIL be forced to shut down the Usar plant "I don't think so.

We are trying to sort out the matter." We are told that GAIL chairman Proshanto Banerjee has approached ONGC chairman Subir Raha seeking to hold ONGC to its commitments. "There was no need for ONGC to set up its own LPG extraction plant when we have one," adds our source.

"Certain decisions were taken by both managements in the past in an adversarial spirit. We hope to be able to put all this behind us and move forward now that both companies have new chairmen."