Two new gas pipeline tenders expected soon

Vol 14, PW 11 (18 Nov 10) Midstream & Downstream

Next month (December) the Petroleum & Natural Gas Regulatory Board is expected to invite bids for two ‘trunk’ gas pipeline projects.

One will be for a 4m cm/d capacity, 180-km proposed pipeline in West Bengal connecting the industrial city of Durgapur with Howrah on the west bank of the Hooghly. Essar Oil had originally proposed this pipeline to carry CBM from its Raniganj block near Durgapur to West Bengal state capital Kolkata, which lies on the east bank of the Hooghly.

The other tender will be for a 1724-km proposed pipeline running from Surat in Gujarat to Paradip in Orissa. Gujarat State Petronet (GSPL) originally proposed this project to transport up to 30m cm/d of R-LNG from Shell’s Hazira LNG terminal near Surat to eastern Indian factories.

But the Board wants this pipeline to be of uniform diameter so it can transport gas in the reverse direction, if needed - from Reliance and ONGC’s Mahanadi basin blocks near Orissa to western and northern India. This Surat to Paradip project will also pass through Maharashtra and Chhattisgarh and meet GSPL’s proposed Mallavaram to Bhilwara pipeline at Nagpur in Maharashtra, a city more famous for delicious oranges than gas pipelines.

Diameters for both projects will be “biddable”, but the Board would prefer the Surat to Paradip project to have “a uniform diameter along the entire length.” Before floating either tender, the Board must decide how bidders should quote ‘zone-tariff’ rates.

Typically, the Board divides cross-country gas pipeline projects into 300-km ‘zones’. “Based on our experience with past tenders,” says a Board source, “we’re debating whether bidders should quote a separate tariff for the first zone and then increments for successive zones (as is done now) or if they should quote a ‘uniform weighted average’ on a yearly basis.