GAIL India, a leading natural gas company, is currently pursuing domestic and transnational projects. GAIL India CMD, UD Choubey, spoke to FE?s Sanjay Jog about the company?s strategy for growth, its current projects and the various projects that the company is involved in, overseas. Excerpts:

GAIL sells over 70% (excluding internal usage) of natural gas in the country. Has the situation improved after the production of gas from KG-D6 field?

GAIL owns and operates a network of over 7,000 km of natural gas, high-pressure trunk pipeline, with a capacity to carry around 150 mmscmd of natural gas across the country. It supplies nearly 110 mmscmd of natural gas per day to power plants, as feedstock for gas-based fertiliser plants and also to nearly 600 other small, medium and large industrial units to meet their energy and process requirements. During 2008-09, gas sale was 79 mmscmd and gas transmission was more than 83 mmscmd. The present gas transmission of over 110 mmscmd, shows an increase of 33% over that achieved in 2008-09 and the expected gas transportation in GAIL by the end of 2009-10 through various expected sources is 161 mmscmd (88% of the market share).

GAIL is actively pursuing opportunities in inter-regional gas trade, both in the form of pipeline gas and LNG. Can you please divulge the details?

GAIL is pursuing various transnational gas pipeline projects like the Iran-Pakistan-India pipe-line, being steered by GAIL at a trilateral level between the three countries. The company has also showed interest in the construction of the IPI pipeline and is pursuing the TAPI pipeline project and the Myanmar-China onshore gas pipeline. Besides, GAIL has recently signed principles of cooperation with South Asia Gas Enterprise Pvt Ltd for cooperation in laying a deep-water gas pipeline from West Asia to India .

GAIL is also in talks with various LNG sellers for the sourcing of LNG for the RGPPL terminal. Till the long-term tie up of LNG is not achieved, GAIL is sourcing LNG on spot/short-term basis at the Dabhol (after commissioning)/Dahej Terminal. Talks are in progress with almost all possible suppliers in the Pacific Basin , West Asia and Africa for the sourcing of LNG.

What is the investment planned on gas pipeline projects and will the projects be completed within the stipulated timeframe?

GAIL is executing various major trunk pipeline projects extending over 5,000 km across the country, including the Dahej?Vijaipur pipeline and the Vijaipur?Dadri pipeline being executed to enhance the DVPL/GREP capacity up to 80 mmscmd. The Dadri?Bawana?Nangal pipeline, the Chainsa?Jhahhar pipeline and the Jhajjar?Hissar pipeline are also under execution to meet the requirements of various consumers in the northern region. The pipeline from Dadri to Bawana will supply gas to Pragati Power at Bawana and cater to the power needs of the NCR region during the Commonwealth Games 2010. Similarly, the Jagdishpur-Haldia pipeline, the Dabhol-Bangalore pipeline, the Kochi-Kanjirkod-

Bangalore/Mangalore pipelines have been approved by the board and pre-project activities have already begun as per the cost and schedule provided to them. The estimated capex on all these pipeline projects is about Rs 30,000 crore.

It is often thought that GAIL only transports gas but does not supply it because of a lack of back-to-back arrangement. What do you think?

This is not based on facts and is not known to me. GAIL has been supplying around 79 mmscmd and transporting around 110 mmscmd to various consumers. GAIL has been proactive in sourcing gas to maintain and increase its market share and these efforts have assisted in receiving the marketing rights for additional gas of around 18 mmscmd, including the entire PMT gas of 17.3 mmscmd in the last fiscal. Also, GAIL has tied up an additional 5.5 mmscmd from C Series, Bandra and Vasai gas fields in the western offshore region of ONGC. GAIL is in talks with suppliers like HOEC (Tamil Nadu), SGL Consortium (Rajasthan) and other new upstream players under Nelp to source additional gas. To meet the requirements of customers, GAIL has sourced spot RLNG from sources like PLL and HLPL.

City gas distribution is one of the key areas in which GAIL has firmed up a major plan. However, the CGD faces regulatory and administrative hurdles. How is the project progressing?

Over 200 cities will come under GAIL?s existing and new pipelines and it has the potential for city gas distribution networks of transport and piped natural gas. GAIL is a pioneer in city gas distribution projects and we believe that the next decade will belong to city gas in India . The company has set up a wholly-owned subsidiary, GAIL Gas Limited, to pursue city gas distribution and CNG corridor projects.

Currently, we have 8 JV companies conducting CGD and CNG business for the transport sector in various cities. GAIL Gas has already emerged the winner in four cities put up by the regulator for competitive bidding and one has been bagged by our JV, BGL, for Kakinada city. The four projects in Kota , Dewas, Sonepat and Meerut are already on fast-track implementation.

What are major projects GAIL is pursuing in various countries?

GAIL is globalising its businesses in pipelines, LNG, gas processing, petrochemicals, city gas, CNG and E&P. GAIL has also made investments in Egypt , China , Myanmar and Oman . In Egypt , GAIL has secured participating interests in three retail gas companies and in China , the firm has made strategic investments in China Gas Holdings Limited. In Myanmar , GAIL is a part of the consortium of Daewoo, Kogas and OVL in two offshore E&P blocks and holds a 10% participating interest, while in Oman , GAIL holds a participating interest of 25% in E&P Block 56. Equity investments in Natgas , Egypt have been made through GAIL Global ( Singapore ) Pvt Ltd.

In addition to these projects, GAIL has formed 50:50 JV with China Gas Holdings Limited, while GAIL and Natgas , Egypt have agreed to jointly explore city gas/CNG business opportunities in Libya , Algeria and other African countries. A JV between GAIL and Natgas, to explore new business opportunities in West Asia and the Arab countries has also been proposed. GAIL has been shortlisted as a core investor for participation in the Nigerian Gas Master Plan project and is interacting with the government of Nigeria and Nigerian Gas Company for participation in petrochemical, pipeline and city gas/CNG projects in Nigeria . In addition, GAIL is interacting with companies in Russia for developing CNG facilities in Moscow and with the government of Turkmenistan to develop CNG and gas processing facilities.