A hard lesson in gas marketing for ONGC

Vol 4, PW 3 (15 Mar 00) Exploration & Production

In a country where industry is desperate for natural gas, you would think people would jump at the chance to buy direct from ONGC instead of going through the Gas Authority of India (GAIL).

Not so! First indications from a tender by ONGC in Gujarat indicate there will be little if any response. Why Inexperience in gas marketing.

"They don't understand the gas business," one company that studied the tender documents tells Petrowatch, "They are asking for GAIL-like terms but aren't offering GAIL's infrastructure." Those responsible for issuing the tender should have learnt their lesson - but no. "This is the second time the tender has been issued," learns Petrowatch, "The first was a flop." In the document, entitled 'Inviting Offers For Utilisation of Low Pressure Natural Gas in WOBU' (see below), ONGC writes: "The applicant company shall lay the pipeline at its cost and risk after the gas allocation." It adds: "Gas price shall be as per Government of India pricing policy, administered or free market price." It adds: "The gas shall be supplied as and when available." Bemused, a potential bidder replies: "Why should I pay ONGC Rs2.50 per cubic metre for irregular supplies and have to build my own pipeline when I can pay GAIL the same price and get uninterrupted supplies and access to the HBJ" A deadline for submission of bids expired on 29th February.

Under a directive issued by India's Gas Linkage Committee, ONGC has the right to sell gas direct to the end user from fields producing 100,000 cm/d or less. Notice inviting offers for gas utilisation Name of ONGC area Qty available (cubic metres per day) GGS-Dabka, near Dabka village (Dist:Vadodara) 15,000cm/d EPS Jolwa, near Jolwa village (Dist:Bharuch) 20,000cm/d GGS-Olpad (Dist:Surat) 8,000cm/d EPS-Limbodra-10, near Pinterda village (Dist:Gandhinagar) 7,000cm/d EPS-Linch, near Modarda village (Dist:Mehsana) 5,000cm/d EPS-Langnaj (Dist: Mehsana) 10,000cm/d EPS-Gamij, Dehgam, Taluka (Dist:Gandhinagar) 3,000cm/d EPS-Nandasan, near Kaiyal Village (Dist:Mehsana) 10,000cm/d TOTAL: 78,000cm/d