The Hindu Business Line : GGCL plans to procure natural gas via PMT venture

The enhanced procurement to support the company's plan to expand supplies to new locations in Gujarat and increase sales in the already networked areas.

Kolkata , Sept. 5

Gujarat Gas Company Ltd (GGCL), a subsidiary of British Gas India, is planning to procure 1.5 million metric standard cubic metre (mmscmd) of natural gas per day from Panna-Mukta-Tapti (PMT) joint venture by 2007. The supplies may be available from BG's share of equity gas in the joint venture.

Having registered a net profit of Rs 903 crore on a turnover of Rs 6,393 crore in 2005, GGCL is the country's largest private sector gas distribution and transmission company. The enhanced procurement will support the company's plan to expand supplies to new locations in Gujarat and increase sales in the already networked areas.

PMT is a joint venture between ONGC, BG and Reliance and is currently commissioning a $900 million (over Rs 4,000 crore) project to enhance natural gas production from 10.5 to 17 mmscmd. Divided in two parts, the capacity expansion project will be fully commissioned post-monsoon 2007.

According to sources, BG India has already expressed intentions to offer its additional equity gas share of 1.5 mmscmd to be available from Tapti oilfield to GGCL.

While pricing details of the proposed supplies to GGCL are not known, sources said that it would not be less than $4.75 per mmbtu (million metric British thermal unit), which is substantially higher than the existing procurement costs of GGCL. PMT has already firmed up supply agreements with several customers at $4.75 per mmbtu.

When contacted a GGCL spokesperson, however, refused to comment on the development. British Gas expressed their inability to make any immediate comment and asked for more time.

GGCL's expansion plan

GGCL has invested Rs 160 crore in 2005 and earmarked another Rs 110 crore capital expenditure this year for augmenting the pipeline network and creating other related infrastructure.

The company currently procures close to three mmscmd gas from various sources, bulk of which (1.27 mmscmd) is procured from the Cairn Energy operated Lakshmi field. Of the rest, 0.7 mmscmd is procured from PMT.

GGCL has already established 2,200 km of pipeline network connecting industrial areas of Ankleshwar, Bharuch, Surat, Kin and Karanj and is currently extending its network to Vapi. The project is expected to be commissioned by this year end.

The company is currently witnessing 30 per cent growth in retail sales and is expecting CAGR of 15 per cent over next few years.

Price movement

GGCL shares closed at Rs. 1027 on Tuesday as against a closing price of Rs. 1023.55 on the previous day.