Concern for economy as Gujarat gas output drops

Vol 12, PW 7 (21 Aug 08) Midstream & Downstream

Gujarat energy minister Saurabh Patel has hit out at Delhi amid reports of sharply declining production from some of the state’s major gasfields.

“All the promises and assurances given by the federal government to Gujarat since the days of (late prime minister) Rajiv Gandhi for an increase in our share of gas from the Panna, Mukta and Tapti fields have not been honoured,â€‌ Patel tells PETROWATCH, in an exclusive interview. “Depletion of gas reserves in Gujarat and Delhi’s failure to honour its promise of more PMT gas is definitely hurting our economy.

â€‌ Patel’s fury comes as Gujarat reports a sharp drop in local gas production over the past three months. A confidential report prepared for Patel in mid-July – and seen by this report - reveals the biggest drop was in June this year when Gujarat recorded total gas production of just 216m cubic metres (approx: 7.2m cm/d), a sharp drop of 15% from last year’s June figure of 254.7m cubic metres (approx: 8.47m cm/d).

In May this year the situation was no better, with total gas production for the month registering 227m cubic metres (approx: 7.56m cm/d) - a 10% drop from May last year, when the state produced 254m cubic metres (approx: 8.46m cm/d). Only in April this year was the drop less pronounced, with Gujarat recording 225m cubic metres (approx: 7.5m cm/d) compared to 254m cubic metres (8.46m cm/d) – a drop of 7.4%.

Contacted separately, Gujarat government officials pin most of blame on depleting reserves at the Cairn-operated Lakshmi and Gauri fields at CB-OS/2 and the Niko-operated Hazira gasfield. In Q2 results for 2008, Cairn admits total production at the Lakshmi, Gauri and CB-X fields at CB-OS/2 now average only 1.41m cm/d.

Similarly, in results to June this year, Niko announced that production at the Hazira fields is 1.34m cm/d only. “Production is peaking,â€‌ admits a source.

“There have been no major discoveries in the past year and Gujarat’s share of national gas production is coming down at an alarming rate.â€‌