Gas Sourcing and Transmission Key to GAIL India's $4.25 Billion Project Investment Plans Through 2010

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). Gas Authority of India (GAIL) is stepping on the gas with plans to invest $2.76 billion on the construction of four new pipelines in the next five years. This represents 65% of the total capital expenditure of $4.25 billion over the same period. The balance will be spent on petrochemical and power projects.

The company's Chairman and Managing Director, Proshanto Banerjee, said that the company is planning to invest an estimated $638 million in a Jagdishpur-to-Haldia pipeline, another $638 million in a Dadri-to-Nangal pipeline, $1.06 billion in the Kakinda-to-Uran line and $425 million for a pipeline linking Kochi-Coimbatore to Bangalore. These figures are rough estimates for the pipeline projects' investment requirements, and the actual cost would only be known when the detailed feasibility reports have been prepared, he said.

The first two pipelines will each have a capacity of twelve million standard cubic meters of gas per day (scmd) and will carry regasified LNG from Dahej to Gujurat. The third pipeline will carry gas from the new LNG import terminal of Petronet LNG, at Kochi in Kerala. The Kakinda-Uran pipeline will transport the government's share of gas from the Krishna-Godavari Basin in the Bay of Bengal. The company estimates that the various blocks in the basin could sustain a twelve million scmd pipeline.

Construction of the 280,000 tpa Assam Petrochemical polymer complex will require an investment of $1.1 billion, and a further $1.5 billion will be put into the 700,000-ton petrochemical ethylene (600,000 tpa) and propylene (100,000 tpa) complex in Kochi. The company is also in talks with Iran's National Petrochemical Company on a possible joint venture to construct a one million ton gas cracker.

GAIL is looking to source 2.1 million tons of LNG for the re-start of the 2184 MW Dahbol power plant (now renamed Ratnagiri) and another three million tons for onward sales to clients, which would make the LNG sourcing business a viable proposition. Discussions are taking place with potential suppliers in Malaysia, Oman, Qatar, Yemen, Australia, Abu Dhabi, and Nigeria for LNG sourcing. The Managing Director said that the preliminary discussions indicated the availability of gas in the second half of 2006 and mid-2007.

The company's rural gas sales in 2004/05 increases by 8%, to 68.10 million scmd, from 62.84 million scmd in 2003/04. Gas transmission rose by 14%, to 71.56 scmd in 2004/05, from 62.84 scmd in 2003/04. In the same period GAIL's total liquid hydrocarbon production, including LPG, only increased from 1.37 million tons to 1.39 million tons.

The company is also in the process of acquiring 10% of the gas-fired 1,000 MW Doraha power project and a stake in the 1,000 MW Bawana power project.

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