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Our Bureau

In talks with major gas producers

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New Delhi Feb. 2 As part of its plans to expand its reach in the gas business, the State-owned gas transmission and marketing company GAIL (India) Ltd is exploring opportunities with major gas producers in the country, including ONGC, Cairn Energy, GSPC and Reliance Industries Ltd for souring gas and setting up pipeline projects.

Besides, the company's board has also given its nod to float a new 50:50 joint venture with China Gas Holdings to undertake compressed natural gas (CNG), city gas distribution (CGD) and other related projects in both the countries.

The joint venture is expected to be called Zhongyin Energy Company Ltd and will be registered in Bermuda, a tax haven. Zhongyin means Sino-Indian.

GAIL had picked up 10 per cent stake in China Gas in 2005 for Rs 137 crore. Speaking to Business Line, the Chairman and Managing Director of GAIL, Mr U.D. Choubey, said that the city gas distribution project would be one of the priority areas for the company.

It has already identified 28 cities for implementation of the project. GAIL is planning to implement the projects as a joint venture with other oil companies on the patterns of Indraprastha Gas Ltd (IGL), which is into the business of supplying CNG and PNG for domestic cooking in the Capital. Initially, GAIL would be looking at the existing pipeline catchment area and subsequently expand.

In today's scenario, players in the sector cannot work in isolation, he said. For example ONGC needs to harness its gas from Mahanadi and Krishna Godavari basin, Mr Choubey explained. A joint venture with ONGC is under consideration for the purpose, he pointed out. ONGC has discovered huge gas reserves off the Andhra Pradesh coast and is looking at partners to transport the gas to the market.

Deal with ONGC

According to reports, GAIL has inked an agreement with ONGC for laying a pipeline between Kakinada and Haldia to transport gas discovered by ONGC in the East Coast. Indications are that GAIL and ONGC will form a special purpose vehicle (SPV) for laying the pipeline from Kakinada in Andhra Pradesh to Haldia in West Bengal.

Both the State-owned companies are also looking at developing networks to supply natural gas to household and commercial establishments for cooking purposes, and CNG in cities falling on the pipeline route.

Outlining other priority areas soon after assuming office as the CMD, Mr Choubey said, the company would like to focus on full capacity utilisation of its existing pipelines, which have a capacity of 130 million standard cubic metres per day (MMSCMD), enlarge exploration and production activities, focus on enhancing performance of the processing plants, and better employee relations.

More Stories on : Outlook | Petroleum | GAIL (India) Ltd

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