Gail gears up to market RIL gas from K-G D6

Written by Sanjay Jog | Mumbai | Updated: Feb 3 2009, 05:32am hrs
The state-run gas transporter Gail India is in the midst of finalisation of commercial details with Reliance Industries Ltd (RIL) for marketing of 30 million metric standard cubic metre per day (mmscmd) of KG D6 gas. Gail India has already finalised commercial terms of marketing of 10 mmscmd of KG D6 gas. RIL, which proposes to start production by end of February or early March, plans to initially produce 40 mmscmd and increase it up to 80 mmscmd. Gails move is crucial in the wake of recent Bombay High Court order allowing RIL to sell natural gas from its KG basin block at the government approved price of $4.20/mmbtu, till the final judgment on the on-going case is pronounced.

Gail India chairman and managing director UD Choubey told FE on Monday, We expect RIL to get gas at a particular point so that Gail can immediately start its transportation through its pipeline network. We also expect government intervention so that judicious and full utilisation of gas under the gas utilisation policy can be achieved. He said Gail India has already equipped with the necessary pipeline network so that 40 mmscmd of gas can be transported to over 35 fertiliser plants, power plants and other sectors. As per the gas utilisation policy cleared by the empowered group of ministers, K-G D6 gas will be allocated priority wise to fertiliser, LPG and petrochemical plants, power plants, city gas distribution network, refineries and other industries.

Choubey informed that the company will do the marketing of K-G D6 gas as per MoU with RIL 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. 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.

Further, Choubey said the company will raise $500 million through ECB and Rs 700 crore domestically to finance its ongoing Rs 15,000 crore pipeline project. We will require these funds in the third quarter of 2009-10, he added.