GAIL India to Complete Seven Pipeline Projects and Four Compressor Installations by 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--GAIL India Limited (BSE:532155) (New Delhi), India's largest gas transmission and marketing firm, plans to commission seven gas pipeline projects and four associated compressor installations by October 2010.

Among the projects scheduled for completion in 2010 is the ongoing construction of the 610-kilometer (km) Dahej Vijaipur II pipeline (DVPL-II) project, connecting Dahej in Gujarat to Vijaipur in Madhya Pradesh. The project involves laying a 48-inch-diameter pipeline to transport high-pressure natural gas along the route of the existing 42-inch DVPL-I. Aimed at increasing the gas transport capacity of the existing pipeline, the DVPL-II will be looped with DVPL-I at several locations en route. Suez-Tractebel SA (Brussels, Belgium) has been appointed as the project management consultant for the capacity expansion project.

The DVPL pipeline would be extended to Dadri in Uttar Pradesh through the ongoing 500-km Vijaipur-Dadri pipeline project. In December 2008, GAIL awarded a contract valued at $46.85 million to a consortium of Kalpataru Power Transmission Limited (BSE:522287) (Mumbai) and Zangas JSC (Moscow, Russia) to lay a 165.5-km section of the pipeline in Madhya Pradesh and another contract valued at $80.03 million to Essar Constructions India Limited (Mumbai), a subsidiary of the Essar Group (Mumbai), to lay the remaining 333-km section of the pipeline up to GAIL's receipt terminal in Dadri. The DVPL and Vijaipur-Dadri pipelines would transport regasified liquefied natural gas (R-LNG) from the Dahej terminal in Gujarat operated by Petronet LNG Limited (BSE:532522) (New Delhi) for consumption at Dadri.

The VDPL would be further extended to Bawana in Haryana under the Vijaipur-Dadri-Bawana pipeline (VDBPL) project, which is estimated to cost $780 million. The original tender for the supply of 100,000 tons of pipes for the VDBPL project was floated on August 14, 2008, with the last date of submission of bids set as September 18, 2008. GAIL received bids from eight firms, including four foreign companies: Europipe GmBH (Mulheim an der Ruhr, Germany), Marubeni Corporation (TYO:8002) (Tokyo, Japan), Panyu Chu Kong Steel Pipe Company Limited (Guangzhou, China), and Izhora Pipe Mill JSC (St. Petersburg, Russia). However, in November 2008, after a plunge in steel prices because of the global economic recession, GAIL decided to reissue tenders for the project. The firm has appointed Engineers India Limited (BSE:532178) (New Delhi) as management consultants for the bidding process and the project. The pipeline will be designed to have a throughput capacity of 14.1 million metric standard cubic meters per day (mmscmd) of gas. The laying of the pipeline is scheduled for completion by January 2010 and the pipeline is slated for commissioning by March 2010.

The VDBPL project will supply natural gas to the 1,500-megawatt combined-cycle gas turbine power plant at Bawana being developed by Pragati Power Corporation Limited (PPCL) (New Delhi). In October 2007, GAIL entered into a 15-year gas sales agreement with PPCL to provide 2 mmscmd of R-LNG for the Bawana combined-cycle gas turbine power plant. According to the agreement, fuel supply will commence from October 2009. The power plant is scheduled for commissioning by October 2010 and will address the power requirements of the National Capital Region for the Commonwealth Games scheduled to be held in New Delhi from October 3 to October 14 in 2010.

Another pipeline would be laid to connect Bawana with Nangal in Himachal Pradesh under the 610-km Dadri-Bawana-Nangal pipeline project, which is estimated to cost $488 million. In November 2008, GAIL entered into an agreement with the state government of Himachal Pradesh to jointly assess the feasibility of extending the Dadri-Bawana-Nangal pipeline into the industrial regions of the state at an investment of $58.56 million.

GAIL also plans to lay an 86-km pipeline from a tap-off in the VDBPL at the firm's dispatch terminal at Chainsa near Faridabad in Haryana. The pipeline would pass through Gurgaon to a receipt terminal at Jhajjar in Haryana. This would be followed by an 18-km spur-line from Jhajjar to Bamnouli in New Delhi. The Chainsa-Jhajjar-Bamnouli pipeline project and the Chainsa-Jhajjar spur line project will provide natural gas to consumers in Delhi, Haryana and Rajasthan. In January, GAIL floated a tender, inviting bids for the two projects. JP Kenny Pty Limited (Perth, Australia), a subsidiary of JP Kenny Engineering Limited (Aberdeen, United Kingdom), has been appointed as the management consultant for both the projects.

The Chainsa-Jhajjar pipeline would be further extended to Hissar in Haryana under the 310-km Chainsa-Gurgaon-Jhajjar-Hissar pipeline project that is estimated to cost $195 million. The pipeline would pass through the states of Rajasthan and Haryana and will transport 35 mmscmd of gas procured from the D6 fields in the Krishna-Godavari basin operated by Reliance Industries Limited (BSE:500325) (Mumbai). The Dadri-Bawana-Nangal pipeline and the Chainsa-Gurgaon-Jhajjar-Hissar pipeline projects are part of the first phase of GAIL's ambitious plan to develop a pan-India gas pipeline grid by 2009-10 at a total investment of $3.9 billion.

In addition to the pipeline projects, GAIL is also planning to install compressors at Jhabua, Vijaipur and Kalaras in Madhya Pradesh, and at Chainsa by 2010. The compressor stations at Jhabua and Vijaipur will entail an estimated investment of $271 million. The compressor stations are required to increase the pressure of natural gas to ensure efficient transmission through the pipelines and to meet the contractual pressure requirements of various customers en route.

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