GAIL/ONGC gas initiative hits ministry barrier

Vol 14, PW 24 (02 Jun 11) People & Policy

Apathy can be a dangerous emotion, especially among bureaucrats unwilling to recognise easy solutions to India’s precarious gas supply deficit, made worse by dwindling D6 production.

How else to explain oil ministry reluctance to endorse an eminently sensible draft policy prepared jointly by GAIL and ONGC on the use and pricing of gas at isolated ONGC marginal fields “We sent this draft policy to the ministry in January,” a senior GAIL executive tells PETROWATCH. “But it still hasn’t got back to us.

” GAIL and ONGC, he explains, want to commercialise ‘stranded’ gas at eight small ONGC-operated fields, mainly in Gujarat, which could produce around 10,000 cm/d each for up to three years. Their proposal suggests gas from the fields could be sold to local industrial customers through a competitive bidding system.

When contacted, oil ministry officials express reluctance to approve the GAIL/ONGC draft policy, saying it contradicts the government’s broader Gas Utilisation Policy, in place since 2007 to govern the allocation and pricing of domestic gas. “If GAIL and ONGC can seek bids for gas from whoever needs it,” counters a ministry source, “it then defeats the purpose of prioritising gas allocations by sector.

” But GAIL and ONGC argue the Gas Utilisation Policy does not apply to isolated marginal fields and that their proposal is in line with a decision by the Empowered Group of Ministers on June 28, 2010, which gives them the freedom to sell gas from isolated marginal fields to interested small and medium-sized customers from ‘non-priority’ sectors like ceramics, glass factories or steel mills, not just government designated ‘priority’ sector customers like fertiliser or power companies. Better still, GAIL and ONGC say this gas could be sold in a way that customers can pay for gas compression, processing and evacuation costs themselves.