The Hindu Business Line : Tapti gas field shut down as GAIL cuts purchases

THE ONGC-Reliance-British Gas consortium has been forced to shut down wells at its Tapti gas field for the first time in eight years, after GAIL (India) - its largest gas buyer — cut purchases to one-third.

The Tapti field, which supplies roughly one-fifth of the total 34 million metric standard cubic metres per day (mmscmpd) gas to customers along the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline, has shut wells for the last 10 days, an official with the consortium said.

Production has come down from 10.8 mmscmpd to 6.8 mmscmpd after GAIL cut purchases to 1.5-2 mmscmpd instead of the contracted 6 mmscmpd.

"We have had to close down six to seven wells at the Tapti field. GAIL says it is buying less because some fertiliser plants along the 4,500-km HBJ pipeline have taken their annual shutdown. But we are suspicious because no plant shutdown has ever forced us to curtail our production. There are enough customers in need of gas," the official said.

Industry observers believe this is an extension of the dispute between GAIL and the consortium over supply and pricing of Tapti gas. GAIL, which was the sole gas buyer, had opposed an increase in the gas price scheduled from February 2005, although its gas purchase contract said so.

The price was to become market-linked, increasing prices to $4.90 per mmscmpd from $3.11 per mmscmpd, with a ceiling of $ 5.55 per mmscmpd.

The Petroleum Ministry intervened and in February, allowed the consortium to sell 4.8 mmscmpd gas directly to other customers.

They were asked to sell the remaining 6 mmscmpd to GAIL, as supplies to fertiliser and power customers along the HBJ pipeline.

Meantime, GAIL was asked to make alternative supply arrangements. A revised higher price was agreed upon at a March 29, 2005 meeting with the Petroleum Secretary, Mr S.C. Tripathi.

GAIL is, however, yet to sign the contract and so is not contractually bound to lift supplies. As a result, the consortium has once again written to Petroleum Ministry asking for permission to sell the gas directly to other customers to avoid production losses.

When contacted, a GAIL spokesperson said the company has cut purchases by 2.1 mmscmpd only.

He said the reason for the fall in purchases was because the Oswal and Indo Gulf fertiliser units have gone in for shutdown.

"However, within a few days the consumption of customers is expected to increase and GAIL would be able to take the entire 6 mmscmpd gas," he said.

According to one of GAIL's customers, the company has been pushing liquefied natural gas received at Petronet LNG Ltd's recently commissioned 2.5 million-tonne Dahej LNG terminal, to customers along HBJ. GAIL owns 12.5 per cent stake in PLL.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page