The Hindu Business Line : Cairn mulls foray into city gas distribution

Cairn is interested in using part of the production potential from Ambe field for supply of compressed natural gas and piped natural gas in select markets of Gujarat.

Pratim Ranjan Bose

Kolkata, April 3 In an attempt to capitalise on the downstream opportunities, Cairn India is mulling entry into city gas distribution (CGD) in collaboration with GAIL (India) Ltd. According to sources, Cairn has sounded out the Petroleum and Natural Gas Regulatory Board (PNRGB) in this regard.

While both Cairn and GAIL officials are tight-lipped about the development, industry sources told Business Line that the companies are exploring possible joint venture opportunities in the CGD sector in Gujarat, Andhra Pradesh and Rajasthan.

When contacted, the GAIL Chairman, Mr U.D. Choubey, neither confirmed nor denied the development. “We have received proposals from a number of parties for joint venture opportunities in city gas distribution,” he said. Cairn official sources declined to comment on the issue.

According to sources, Cairn is interested in using part of the production potential from Ambe field for supply of compressed natural gas (CNG) and piped natural gas (PNG) in select markets of of Gujarat. The newly discovered Ambe field is a part of the Cairn operated Cambay joint venture in CB/OS-2 block in offshore Gujarat and is expected to produce a little over 1 mmscmd natural gas by 2010.

This apart, Cairn and GAIL may also use a portion of the production from a satellite field of Ravva in the offshore Andhra Pradesh for supply of CNG and PNG in the select markets of the southern State.

Cairn holds 22.5 per cent operating interest in Ravva oilfield joint venture. Apart from the production from the satellite gas field, Ravva produces 1 mmscmd of associated gas.

The company currently sells about 2.3 million standard cubic metre of natural gas daily to GAIL through two contracts from Ravva. Of the total, one mmscmd production from Ravva is sold as APM gas. The residual non-APM gas includes 0.2-0.3 spot or “fall-back” volume.

The E&P company will also have access to 0.7 mmscmd associated gas once its onshore oil field at Rajasthan starts production. While bulk of the available associated gas may be used for meeting a total of 130 MW captive power requirement, sources say that Cairn is looking forward to strike gas in the region to augment supplies.

City gas distribution including retail industrial supplies (excluding supplies to power and fertiliser) currently constitute 20 per cent of the total natural gas consumption in India. This is in sharp contrast to 60-65 per cent CGD requirement in the developed countries. The trend is expected to be reserved once gas availability increases in the country.