Enron's pipeline and pressure from GAIL

Vol 4, PW 15 (30 Aug 00) Midstream & Downstream

Will the Gas Authority of India succeed in getting a stake in Enron's 515-km gas pipeline from Dabhol to Hazira Difficult to say, but it is certainly trying hard.

Petrowatch understands the Indian monopoly gas major is lobbying the Indian oil ministry to deny Enron's pipeline affiliate MetGas crucial administrative clearance unless it is granted a stake in the proposed 375-km pipeline from Dabhol to Talasari on the Maharashtra border with Gujarat and a 140-km extension to Hazira. What is the motive for GAIL's lobbying A fear that it will lose a significant chunk of the gas transmission and distribution business in Gujarat to a better managed rival, which MetGas arguably is.

Enron would at best be lukewarm to the idea of hiving off a stake in its pipeline to GAIL, at worst hostile. Negotiations with GAIL would be time-consuming, acrimonious and most certainly delay construction of the pipeline.

Industry circles confirm there is little love lost between the two companies, who have had disagreements about gas from Enron's Panna, Mukta and Tapti fields. Worse, inclusion of GAIL might upset MetGas's financial backers, notably the Industrial Credit and Infrastructure Corporation of India (ICICI).

Yet MetGas may have no option. Ram Naik, the oil minister, and other officials in the oil ministry are widely believed to support GAIL's argument that it must be given a stake in the pipeline.

Appropriate pressure, it seems, is being applied on Enron to relent. Whether Enron will give way is another matter.