Reliance approaches GSPC with offer to transmit gas

Vol 9, PW 10 (25 Aug 05) Midstream & Downstream

Reliance and GAIL have separately told GSPC they can transmit its gas from KG-OSN-2001/3 to market.

Reliances offer was made soon after Gujarat chief minister Narendra Modi announced a 20-tcf discovery in June and is significant because the GSPC block sits adjacent to its own KG-DWN-98/3 block where it announced a 14-tcf discovery in October 2002. GAIL first sent a formal proposal to GSPC more than a year ago.

Reliance has been telling GSPC that both companies could share the onshore gas processing facilities, says a source. But there has been no formal proposal yet.

GSPC and Reliance both plan to use Kakinada port in Andhra Pradesh as landfall point for their gas. Reliance is also offering GSPC transmission rights along the cross-country pipeline it plans to lay from Kakinada to Ahmedabad to bring gas to two NTPC power stations at Kawas and Gandhar.

But GSPC is unsure, believing it would be better to retain complete ownership of the gas, even during transmission. In todays deregulated gas market, it is all about controlling the transportation infrastructure, says a source.

GSPC believes whoever brings first gas to market and has a pipeline network will control the market. Other reasons also discourage GSPC from dealing with Reliance.

In an internal assessment GSPC sets out several reasons why it should be cautious, among them the difference in gas composition. One, GSPCs gas is different to Reliances gas.

GSPCs gas is 83% methane (rich) while Reliances is 97% methane (lean). Unlike Reliance, GSPC can extract LPG from its gas.

If GSPC and Reliance gases are mixed, Reliances gas will become richer, we learn. GSPC is not keen on getting into complications about separate accounting for the richer fractions in its gas once theres mixing with Reliance gas even after processing.

More, GSPC needs to lay only a 4-km pipeline to shore but Reliance will have to lay a 70-km pipeline.

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