Vol 3, PW 8 (12 May 99) Midstream & Downstream

Indias oil ministry has rejected a proposal from Reliance to use gas from the Mid and South Tapti gasfields as feedstock for a proposed 2,000-MW power project in the Amreli district of Gujarat, near the port of Pipavav.

Reliance is one of 27 companies to have bought pre-qualification documents for the project, which - in an unprecedented move for Indian tenders - leaves the choice of feedstock to the contractor. Reliance has a 30% stake in the Mid and South Tapti gas prospect, in an alliance with Enron (30%) and ONGC (40%).

Reliance reckons gas reserves at Tapti are more than twice the original estimate of 67bn cubic metres and is presently in a battle with ONGC and the DGH to triple production. In January 1999, this stood at an average 4.8m cubic metres a day (Source: ONGC).

Petrowatch learns Reliances proposal to use Tapti gas for the Pipavav power project - promoted by the Power Grid Corporation of India - earlier received the blessing of oil minister Vazhappady Ramamurthy. However, oil secretary TS Vijayaraghavan, has blocked it, surprising all around him, not least Reliance.

One theory circulating is that the incorruptible Vijayaraghavan - sensing the vulnerability of his boss Ramamurthy - is trying to stamp out a corrupt deal. A more plausible explanation is that the DGH is yet to come up with a revised figure for reserves at Tapti that would allow the ministry to give the green light.

It seems unlikely the Pipavav project will go through in a hurry. Political instability has forced an indefinite cancellation of last weeks 6 May pre-qualification deadline for submission of bids.

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