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New Delhi, Dec. 7 Reliance Gas Transportation Infrastructure Ltd (RGTIL) on Friday has signed a framework agreement with state-owned GAIL (India) Ltd for transporting natural gas from Reliance Industries Ltd’s (RIL) asset in the Krishna-Godavari Basin.

Industry sources said the transmission agreement provides for booking of capacity of RGTIL on GAIL pipeline network in the KG Basin.

RGTIL would be using GAIL’s network for sale of gas in Andhra Pradesh and Maharashtra and other States, while GAIL will be using RGTIL network for supply to its customers, sources said. This agreement formalises an earlier understanding reached between the two entities for transportation of gas.

In May, GAIL had signed a term sheet to buy gas from Reliance Industries and also booked capacity in RGTIL’s pipeline.

RIL, which owns 90 per cent stake in D6 Block, has found huge gas reserves in the KG Basin. The production from the block is expected in mid-2008. Reliance plans to initially produce 40 mmscmd and increase it up to 80 mmscmd.

In March, GAIL and RIL had inked an MoU for co-operation in the gas sector. The areas of joint co-operation identified included natural gas pipeline transmission and marketing, CBM gas opportunities, city and local gas distribution, among others.

Under the MoU, the two companies were to work out the modalities for transportation of natural gas from the various gas sources of RIL in Krishna Godavari and Mahanadi basins through pipeline and long-term arrangements with regard to gas supply and distribution.

The MoU also provided for co-operation between GAIL and RIL in the purchase, sale, swap and marketing of gas and import of gas through trans-national pipelines. Further, the two companies would share pipeline capacity in Andhra Pradesh, Maharashtra and Gujarat on mutually agreed terms.

More Stories on : Petroleum | Announcements | GAIL (India) Ltd | Reliance Industries Ltd

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