Press Releases

[New Delhi, February 10, 2005]

GAIL to supply natural gas to SAIL plants

(Sl. No. ND/CC/05/07)

GAIL (India) Limited and Steel Authority of India Limited (SAIL) have entered into a Heads of Agreement (HoA) for supply of natural gas / R-LNG to various plants of SAIL. With the project which is likely to be completed in 2006-07, the steel major in public sector is the first steel producer in India to opt for use of natural gas as an alternative source of coking coal. The agreement was signed by Mr. R Suresh, Executive Director (Marketing), GAIL and Mr. V Shyamsundar, Executive Director (Corporate Planning), SAIL in New Delhi today. Mr. Proshanto Banerjee, Chairman and Managing Director, GAIL and Mr. V S Jain, Chairman, SAIL were present on the occasion.

The HoA envisages supply of natural gas to the tune of 3.56 million metric standard cubic metre per day (MMSCMD) in year 2006-07 to various SAIL plants. The requirement of different SAIL units in terms of MMSCMD is: Bhilai Steel Plant - 0.913, Durgapur Steel Plant - 1.156, Rourkela Steel Plant - 0.427 and Bokaro Steel Plant - 1.067.

SAIL had approached GAIL to explore the possibility of obtaining of natural gas for bulk usage in its four integrated steel plants. With growing demand for coking coal world over, there has been a shortage of this vital input used for steel making. SAIL had faced major difficulty in availability of coking coal during the first few months of current financial year. This had prompted the steel major to opt for use of alternate fuels like coal dust injection (CDI), use of coal-tar, etc. Once the natural gas is available under the agreement, SAIL can further bring down the consumption of coking coal to the extent of around 1 million tonne per annum. Besides, the use of natural gas will strengthen the company’s effort to provide a cleaner environment while reducing its dependence on coking coal to some extent. The use of natural gas will also enhance the productivity of the furnaces and contribute to reduction in cost of operation.

The gas to these plants will be supplied through the proposed Jagdishpur – Haldia pipeline of GAIL. The pipeline is being laid as a part of the Gas Grid planned by GAIL to connect the sources of gas to demand centers throughout the country. Jagdishpur-Haldia pipeline is a significant limb of the Arterial Energy Flow Programme of GAIL for linking sources of gas to demand centers across the country. The 30 inch diameter, 840 km long Jagdishpur – Haldia pipeline is estimated to cost approximately Rs. 2700 crores and will have a capacity of 12 MMSCMD which can be further enhanced to 15 and 21 MMSCMD. The Jagdishpur-Haldia pipeline shall pass through the states of Uttar Pradesh, Bihar, Jharkhand and West Bengal. The pipeline will provide a much needed impetus to the industrial growth in the energy deficient eastern part of the country. GAIL has already identified a demand potential of around 22 MMSCMD along Jagdishpur-Haldia pipeline.

The gas source for the supply through this pipeline will be R-LNG from Qatar and Iran and additional gas from Tapti. Additional R-LNG to the tune of 5 MMTPA (17.5 MMSCMD) is likely to be available at Dahej Terminal and 7.5 MMTPA of LNG is expected to be available from Iran. Further, additional gas from Tapti to the tune of 5.5 MMSCMD would also be available. Gas supply from Myanmar shall also supplement the requirement of customers along this pipeline.

About GAIL (India) Limited

GAIL, primarily a natural gas company, is focused on all aspects of the gas value chain including exploration, production, transmission, extraction, processing, distribution and marketing of natural gas and its related process, products and services.

Today GAIL has additional interests in gas processing, petrochemicals, LPG, transmission and telecommunications. The company has also extended its presence in power, LNG re-gasification, city gas distribution and E & P through Equity/JV participations.

For more information, log on to www.gailonline.com.

About SAIL

With a production capacity of 12 million tonnes (MT) of crude steel, Steel Authority of India Limited (SAIL) is India’a largest and among the leading steel producers in the world. The company’s vast portfolio of long, flat and tubular products in both basic and special steels caters to the exacting requirements of domestic as well as overseas clients.

SAIL now has launched its Corporate Plan to enhance hot metal production capacity to 20 MT by 2011-12 from the current level of 13 MT. The company envisaged a mega investment to the tune of Rs 25,000 crore for its expansion projects.

For more information log on to www.sail.co.in