GAIL estimates huge gas demand in Andhra

Vol 14, PW 4 (12 Aug 10) Midstream & Downstream

GAIL believes factories and businesses in Andhra Pradesh could potentially consume a staggering 90m cm/d of gas.

PETROWATCH learns GAIL has based these estimates on discussions with potential customers. “Even if we took a conservative estimate,” says a company source, “Andhra Pradesh gas demand would be 50m cm/d if we included all the power, fertiliser, steel and aluminium consumers who have registered with us.

” In Vizag alone, he adds, GAIL has lined up industrial and commercial customers for at least 10m cm/d. Andhra Pradesh is home to the coastal village of Gadimoga - famous as the D6 gas landfall point.

Andhra Pradesh itself gets 12m cm/d of Reliance’s current 60m cm/d D6 gas production. Of this, the state’s fertiliser and power companies alone take 11.5m cm/d.

But other Andhra customers are growing hungry for gas as they closely watch growing D6 production and await future production from offshore blocks operated by ONGC and GSPC. Gas production from older onshore Andhra gasfields operated by ONGC and from Cairn’s offshore Ravva field is declining fast, forcing GAIL to look for new sources.

Last year, GAIL received a total 6.5m cm/d of gas from ONGC and Cairn but supplies this year are down to 5.5m cm/d. GAIL sells this gas through its 850-km long pipeline network in Andhra’s East Godavari, West Godavari and Krishna districts.

Pipelines ranging from 4-inch to 18-inch diameters supply 34 factories in these districts with the bulk going to Nagarjuna Fertilisers and Chemicals, which receives 1.4m cm/d. Lanco and APGenco, two electricity generation companies, receive 1.1m cm/d and 800,000 cm/d respectively.

New customers are lining up in the East Godavari, West Godavari, Krishna, Prakasam, Nallur, Guntur and Karimnagar districts of Andhra Pradesh. But despite obvious demand, GAIL tells us it is reluctant to significantly expand its existing Andhra Pradesh pipeline network until it gets a clearer picture abut new supply sources and central government gas allocations.