Competition for Unocal's gas from Bangladesh

Vol 5, PW 12 (01 Aug 01) Midstream & Downstream

Lucky Unocal! If its pipeline from Bangladesh happens, GAIL and Indian Oil will compete head on for the right to buy the gas and resell it.

GAIL's agreement with Unocal is public knowledge, but we now learn IOC is making a serious pitch for the business too, and has requested the oil ministry for permission to sign a "Confidentiality Agreement" with Unocal as a "first choice" distributor of Bangladeshi gas. This was among several issues discussed at a meeting between oil minister Ram Naik and IOC and GAIL chairmen M.

A Pathan and J.K Jain on 18th July.

IOC justifies its attraction to Unocal with the fact that it controls 70% of the "direct consumer business" for petroleum fuels in West Bengal, Bihar and Uttar Pradesh, all natural markets for Bangladeshi gas. "Natural gas would mainly substitute the liquid fuels." Another compelling argument is its right of way.

"IOC has a vast network of pipelines in northern India and enjoys the distinct advantage of right of way," adds a note. "Laying of gas pipelines from the Bangladesh border to northern India would be easy for IOC." Really Does this right of way extend to construction of a parallel gas pipeline Unocal will need to find out.

Lastly, IOC fears Bangladeshi gas would replace LPG as cooking fuel and doesn't want to lose revenue. "Substitution of domestic LPG with natural gas would impact our LPG business," adds the note.

"Marketing of natural gas by IOC would help us retain volumes."

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