More gas about to come to market in Andhra Pradesh

Vol 9, PW 6 (30 Jun 05) Midstream & Downstream

Gas starved customers in Andhra Pradesh can take heart.

Their unending wait for gas supplies will soon be history. We learn GAIL expects to receive additional supplies of about 5m cm/d from offshore gasfields in the Krishna Godavari basin to feed the regional market and that these supplies are likely to begin arriving in another two to three years.

Customers in the KG area presently receive around 6.8m cm/d of which 4.4m cm/d is from ONGCs onland fields and another 2.4m cm/d from the Cairn Energy-operated Ravva field. As with the rest of India, gas demand in this region far outstrips availability.

Sample this: the Gas Linkage Committee, attached to the oil ministry has allocated 9.5m cm/d to industries in the region - some 2.7m cm/d more than availability. Absent from this figure are customers who need gas but have not applied for any supply.

Also absent is demand from four new private power projects in the region that are expected to begin operations shortly. These power projects have been allocated another 6.7m cm/d, bringing total registered gas demand in the region to 16.20m cm/d.

GAIL believes rising demand particularly from the power stations - and new supply sources make it worthwhile to lay more pipelines and upgrade its existing infrastructure. Once new pipelines are laid, GAIL could transmit 16m cm/d against present capacity of 14m cm/d.

New gas supplies will come from ONGC and the Ravva joint venture. GAIL is talking to ONGC for 1.5m cm/d to 2m cm/d from the eastern offshore G-1 gasfield, which ONGC hopes to bring to market by the end of next year.

No discussions have taken place on price. ONGC has not yet quoted a price, a GAIL source tells us.

In private, GAIL expects ONGC to quote a price close to what the Ravva consortium receives for gas from its satellite fields. GAIL also hopes to receive more gas from Ravva.

See below.