Sundareshan threat to cancel D6 gas allocation

Vol 13, PW 19 (11 Mar 10) People & Policy

Oil secretary S.

Sundareshan (left) has warned companies of dire consequences if they fail to use their D6 gas allocation. Sundareshan issued his unusual threat during a 3pm meeting at Shastri Bhawan on March 8 attended by new additional secretary Sudhir Bhargava; joint secretary (marketing) Apurva Chandra; director (gas) Manu Srivastava; and representatives from Reliance, Indian Oil, BPCL, HPCL, GAIL, NTPC and others.

“Sundareshan said the ministry would ask the Empowered Group of Ministers to allocate more D6 gas on May 1,â€‌ said a source. “He gave a cut-off date of April 20 to companies that have failed to offtake D6 gas to get organised or the ministry would tell the EGoM to cancel their allocation.

â€‌ Sundareshan’s anger, we hear, is directed mainly at IOC, HPCL and Essar - who have all failed to offtake their allocated D6 supplies. IOC, for example, admits it is yet to begin drawing 1.6m cm/d D6 gas and blames GAIL.

“We wrote to GAIL on February 26 to come and sign a gas transmission agreement,â€‌ a source tells us. “They did not reply.

When we met GAIL (on March 5) it said it has â€کcapacity constraints’ and can’t commit to an exact date.â€‌ IOC wants the bulk of its D6 allocation (1.4m cm/d) for its 8m t/y refinery at Mathura and accuses GAIL of not installing a gas-metering facility at the refinery by end-February, as promised.

“GAIL has informally told us it will have free pipeline capacity for us in July only,â€‌ adds IOC. At HPCL, internal approvals are awaited before it begins drawing its 260,000 cm/d â€کfirm’ and 240,000 cm/d â€کfall back’ gas for its 6.5m t/y refinery at Mumbai.

“Next month (April) we should start buying D6 gas,â€‌ says HPCL. Likewise Essar, contacted by this report, says problems with Gujarat State Petronet are holding up supplies of 600,000 cm/d to its 12m t/y refinery at Vadinar in Gujarat.