Choked GAIL pipelines lead to glut of gas

Vol 13, PW 19 (11 Mar 10) Midstream & Downstream

Unbelievable it may sound, but India is experiencing a glut of gas in a dramatic reversal of the country’s traditional shortages.

Steady inflows of D6 gas and more long term LNG cargoes at Dahej are â€کchoking’ GAIL’s gas transmission pipelines (left) with excess supplies desperately looking for a home. Reliance is pumping out at least 60m cm/d into the Indian market, while an additional 10m cm/d R-LNG has also hit GAIL’s nationwide pipeline system since RasGas began delivering â€کsecond tranche’ cargoes of 2.5m t/y long term LNG to Dahej in January.

Many of GAIL’s contracted new R-LNG customers are turning away in favour of cheaper D6 gas. “These customers have â€کtake or pay’ agreements with us,â€‌ explains GAIL.

“But we aren’t enforcing these agreements because of mitigation clauses saying we should try our best to find other customers if the original customers can’t take it.â€‌ Reliance by contrast is strict about its agreements with D6 gas customers and is not releasing them.

Besides, most customers, especially in the â€کpriority fertiliser sector, prefer cheap D6 gas rates to R-LNG. According to GAIL, delivered â€کsecond tranche’ R-LNG costs around $7/mmbtu - approximately $1/mmbtu more than delivered D6 gas.

“Every day we are forced to look for new customers!â€‌ complains GAIL. At any given time GAIL says it has excess supply of between 500,000 cm/d and 2m cm/d in its system.

Normally this would not be a problem, but GAIL’s main cross-country transmission pipelines have no spare capacity so it cannot even divert excess supplies to gas-starved regions. Adding to GAIL’s worries is ONGC, which is delivering around 7m cm/d more than usual from the Bassein gasfield.

Typical Bassein production is 22m cm/d but on some days ONGC is pumping out as much as 29m cm/d. Government rules sadly don’t allow GAIL to sell ONGC’s excess Bassein gas to customers who are not entitled to subsidised supplies.