The Hindu Business Line : GAIL agrees to supply additional gas to RIL

New Delhi, Dec. 22 GAIL (India) Ltd has agreed to supply an additional 20 million standard cubic metres (mscm) of gas to Reliance Industries Ltd (RIL) for the commissioning of the latter’s east-west pipeline network at the prevailing price.

The prevailing average gas price is around $5-6 per million British thermal units (mBtu) excluding the transmission charges, taxes, marketing margins and services charges.

GAIL’s Director (Marketing), Mr B.C. Tripathi, told Business Line that “whenever RIL will need gas for the commissioning of its pipeline, depending on the availability we will supply them the product.”

RIL has already sourced 5 mscm of gas from GAIL for testing sections of its 1,386-km east-west pipeline. This 20 mscm will be over and above the 5 mscm already provided.

Pipeline route

The pipeline runs from Kakinada in Andhra Pradesh to Baruch in Gujarat. RIL is looking for gas to test its pipeline network set up to ferry gas from its D6 block in Krishna-Godavari Basin.

Sources said RIL has sought some gas from the Panna-Mukta-Tapti (PMT) fields where it is a joint venture partner along with ONGC and British Gas. GAIL supplies 17.54 million standard cubic metre a day (mmscmd) of gas from PMT fields at the production sharing contract (PSC) determined price.

While gas from Tapti field is available at $5.57 per mBtu, that from Panna-Mukta fields are available at $5.73 per mBtu (excluding of transmission charges, taxes, marketing margins and service charges).

Besides the PMT fields, GAIL also supplies gas from Ravva satellite, re-gassified liquefied natural gas (R-LNG) on term basis from Petronet LNG Ltd (PLL), and spot R-LNG. Sources said that though the actual requirement of gas for RIL to commission the pipeline network is far more (close to 100 mscm), the company wants to make good with whatever gas is locally available.

Testing

The company has tested the pipeline sections from west to east, and now needs gas to check the compressors from east to west to ensure that the pipeline is ready to take the D6 gas. There are 10 sections in the pipeline where there are compressors , sources said.

Reliance plans to begin gas production from the KG-D6 fields sometime next year with initial target of 40 mmscmd to be subsequently ramped up to 80 mmscmd. However, the production is dependent on the outcome of the ongoing litigation.

As regards what happens to the gas procured from GAIL once RIL starts flowing D6 gas, sources said, “Gas sourced from GAIL will remain in the pipeline network to continue the pressure required to flow the KG gas.”

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