The Hindu Business Line : GAIL demurs on CNG foray in Iran

CNG options
GAIL had in 2005 joined hands with Ashok Leyland Project Services Ltd (ALPS), a wing of the Hinduja Group, to explore opportunities in CNG and related sectors in India and abroad — in countries such as Iran, Indonesia, the Philippines, Malaysia and South Africa where complementary capabilities of either or both GAIL and ALPS would be a significant advantage.

New Delhi , August 10

GAIL (India) Ltd is unlikely to pursue its plans for foray into the compressed natural gas (CNG) sector in Iran. Sources said that the state-owned gas transmission and marketing major does not find the proposition attractive.

Sources told Business Line that GAIL, which had entered into an understanding with the National Iranian Oil Company (NIOC)/ National Iranian Gas Export Company (NIGEC) in 2003 covering various activities in the natural gas, CNG and liquefied natural gas (LNG) sectors, did not find the CNG venture `very self-sustainable'. In fact, a team from GAIL had visited Iran and even explored the possibility of setting up joint CNG outlets in that country.

However, the sources declined to elaborate on the reasons why the venture was not found profitable. Indications are that subsidies and other benefits available to Iranian companies were not being extended to GAIL. The company was considering CNG projects at Tehran and Karaj in partnership with Ashok Leyland.

GAIL had in 2005 joined hands with Ashok Leyland Project Services Ltd (ALPS), a wing of the Hinduja Group, to explore opportunities in CNG and related sectors in India and abroad — in countries such as Iran, Indonesia, the Philippines, Malaysia and South Africa where complementary capabilities of either or both GAIL and ALPS would be a significant advantage.

Areas of cooperation

As per the understanding inked between GAIL and the Iranian companies, they would set up joint teams to study and develop project opportunities in identified areas of cooperation. The areas include residential gas and CNG infrastructure in Iran, India and third countries; transportation of large volume of natural gas in CNG form in remote areas of Iran and India; E&P activities in Iran and India; development of gas-based petrochemical plants in Iran; setting up of gas processing facilities; petrochemicals trading; participation in LNG production in Iran and import of LNG to India; and deepwater/onland pipeline study for gas imports from Iran.

Under the memorandum, both GAIL and NIOC/NIGEC were expected to undertake evaluation and implementation of projects related to development of CNG infrastructure and its use in the transport sector in Iran and India.