Great Eastern approval for CBM pipeline to Asansol

Vol 12, PW 6 (07 Aug 08) Midstream & Downstream

After tough negotiations spanning several months, CBM producer Great Eastern Energy has at last won crucial approval from state-owned Indian Iron and Steel Company (IISCO), part of the Steel Authority of India (SAIL) group, to lay a 3.5-km gas transmission pipeline through its Burnpur township to a central gas receiving station at Asansol in West Bengal.

PETROWATCH learns Great Eastern and IISCO signed the pipeline transit agreement on July 21 under which the Kolkata-based and London-listed CBM producer will pay IISCO Rs10 lakh ($25,000) per year in transit fees during the five-year life of the agreement. “After five years the agreement will be renegotiated,â€‌ we hear.

Weeks of deadlock almost led to a complete breakdown in talks after a frustrated Great Eastern bluntly told IISCO that if agreement was not reached it would bypass the township, regardless of the additional pipeline cost in taking a 20-km detour. Help for Great Eastern also came from the oil ministry in Delhi, which leaned on the steel ministry to persuade IISCO “to be reasonableâ€‌.

IISCO is also one of Great Eastern’s potential gas customers and was trying to leverage its position as a transit provider to secure cheap CBM. On this Great Eastern pointedly refused to play ball.

Even after transit negotiations concluded IISCO apparently insisted on paying a heavily discounted rate for future CBM it bought. As expected, Great Eastern refused to make any commitments.

Great Eastern’s success in winning transit facilities is crucial for its plans to supply CBM from the Raniganj field to industries in and around Asansol. Following agreement with IISCO, the company has begun mobilising material and equipment to lay the 3.5-km long, 12-inch diameter steel pipeline through Burnpur.

“Since it is now raining very heavily here,â€‌ we hear, “actual laying work will start only after the monsoons in mid-September, most of the pipeline sections are waterlogged.â€‌