Press Releases

[New Delhi, Janruary 21, 2005]

GAIL for continued supply of Tapti-Panna-Mukta gas to HVJ customers

(Sl. No. ND/CC/05/04)

In order to resolve the deadlock over purchase price of gas sold by Tapti-Panna- Mukta Joint Venture, GAIL has requested the Ministry of Petroleum and Natural Gas to intervene into the matter. Tapti-Panna- Mukta Joint Venture is not agreeing to the price offered by GAIL (India) Limited for continuing the purchase of gas from these fields. The JV recently proposed the ceiling price to US$5.6 per MMBTU from the current level of US$ 3.11per MMBTU for the gas supply being made from these fields to GAIL. However, GAIL has been making a case for charging a reasonable price based on market affordability. Interestingly, JV now proposes to sell this gas directly to alternative markets. This proposal of JV would deprive Power and Fertilizer plants set up along HVJ system from this scarce commodity.

Currently, the Tapti-Panna- Mukta JV supplies about 11 MMSCMD to the HVJ pipeline which in turn used mainly by power and fertilizer plants. Diversion of this sizeable quantity of gas away from the HVJ system would result in a serious and adverse impact on power and Fertilizer production in the country. The diversion of gas would reduce gas based power generation by over 2000 MW or reduction in domestic fertilizer production by over 5.5 million TPA. The country can ill afford such sharp reduction in power output especially when overall plans envisage new capacity addition of about 8000 MW each year. Similarly, the anticipated reduction in urea production of 5.5 MMTPA along HVJ could cost the Indian exchequer dearly as any effort to make up the lost urea production through imports would sharply push up the international urea price which is already in the high range of US $220/ tonne.

Presently around 37 MMSCMD of gas is being received at Hazira out of which on an average 11 MMSCMD of gas is coming from the JV of Tapti and Panna-Mukta and the balance volume is coming from ONGC. The total gas received by GAIL at Hazira is being supplied in line with the Order of the Hon’ble Supreme Court. All these consumers have been allocated gas by the Gas Linkage Committee (GLC) based on the availability of gas from the discovered fields of Western Off-shore including that of Tapti & Panna-Mukta fields. Fertilizer and Power consumers account for the major consumption with their allocation of 17.5 & 14.30 MMSCMD respectively.

GAIL has taken feedback from the consumers on their affordability to bear higher price. While some of the consumers expressed their inclination to bear higher price for gas up to the level of delivered price of prevailing RLNG from Dahej, however, majority of Fertilizer and Power consumers have expressed their reluctance. They have also expressed serious reservations in view of the fact that gas is being supplied to them against the allocations made by the GLC as per the Pricing Order notified by Government of India from time to time. Gas Supply Contract to this effect exists between GAIL and these consumers.