The Hindu Business Line : Gujarat Gas expanding network in Surat, Bharuch

Kolkata/Ahmedabad, July 18 Gujarat Gas Company Ltd – a 65 per cent British Gas subsidiary – is looking forward to expand its network in South Gujarat districts of Surat and Bharuch for future growth in sales.

“The company is planning to extend its services in industrial areas of Jhagaria, Kosamba, Vapi, Kim and others. We feel that together these new areas can contribute 30-40 per cent growth in sales in the next couple of years,” industry sources said, adding that the company could primarily target the existing users of spot LNG which was priced substantially higher than natural gas.

Sales may rise

The Rs 800-crore city gas distribution company currently has sales of roughly 3.5 million standard cubic metre of gas a day in and around Surat, Bharuch and Ankleswar.

Sales are expected to move up sharply beginning September with fresh 1.67 mmscmd supply from British Gas. The fresh supplies will be available from Panna-Mukta-Tapti fields where BG has 30 per cent interest.

After compensating the drop in procurement from GSPC operated Hazira field and Cairn operated Laxmi and Gauri fields in the recent months, Gujarat Gas would be left with approximately 0.7 mmscmd natural gas free for fresh sales.

According to sources, though initially the company may park the fresh availability with bulk industrial users, in the long run the company would focus on tapping more of retail customers – including industrial, commercial (such as hotels and restaurants) and domestic - which generate higher margin.

Out of a total sales of 3.5 mmscmd, GGCL now directs roughly 2.5 mmscmd to the retail segment growing at an average annual rate of 20 per cent.

Of the total retail sales, 80 per cent is sold to industry replacing use of liquid fuel. The rest is directed towards hotels, restaurants and domestic users replacing use of LPG.

Spot LNG

Interestingly, GGCL does not foresee procurement of spot LNG for its future growth, due to cost disadvantage. The company currently uses five per cent APM gas and the rest are tied up marginally below $5 per million British thermal unit (mBtu).

“We have previously used spot LNG to meet emergency requirements. We would look at it in the future only if all other sourcing options are exhausted,” the sources said. Spot LNGs are currently sold at $9-10 per mBtu.