GAIL Chairman and Managing Director B C Tripathi spells out the company’s plans on meeting demand, new supply grids and overseas moves, among other issues, in an interview with Sanjay Jog. Edited excerpts:
India continues to be a major importer of gas. How will it meet the rising demand, with the constraints in global procurement?
Natural gas is one of the cleanest and most cost-effective sources of energy. Its demand is perpetually rising. GAIL is making all possible effort to source from all destinations and effectively reach potential customer points. The LNG scenario across the world remains favourable, owing to a perceptible shift of market dynamics from the traditional consumption points like America and Europe to growing economies like India. There is continuous effort to examine available technologies for importing gas from across the border through the deep sea route, besides the on-land pipeline network option.
What is the revised estimate of shortfall for the 11th plan and projections for the 12th?
Two scenarios of supply have been considered, normal and optimistic. It is expected there would be shortfall in supply to the extent of 67.98 million standard cubic metres a day (mscmd) in 2007-08, which would fall to 42.81 mscmd in 2008-09 in both scenarios. From this level, the gap would increase steadily to 91.13 mscmd by 2011-12 in scenario-I, whereas under scenario-II, the gap would by and large be bridged from 2009-10 onwards and there is expected to be a demand-supply balance during the last three years of the 11th Plan period. Projections for the 12th Plan period are favourable, keeping in view planned LNG imports.
There has been talk on the revision in APM gas prices, which continue to be low. Is it essential and when do you expect it will happen?
Under the APM method, the underlying principle for determination of gas price was to allow producers a specified return on total investment along with cost of production. With the rise in gas prices, revision of APM prices has become necessary for the financial health of companies and we hope it will happen soon.
What is your view on consistent gas pricing in India?
The Government of India is trying to make fuel costs uniform for all consumers and the challenge before government is to get a similar price for all sources. At present, the government is trying to fix the prices of gas produced from blocks given on nomination to state-run ONGC and OIL, while for others it will be determined on the basis of the production-sharing contracts. Pooling or averaging the prices will thus help in setting a common price irrespective of the source.
What is your perspective on the proposed gas grid?
It is true that existence of an efficient gas grid is a pre-requisite for the growth of natural gas usage. GAIL, which already has 7,200 km of a natural high-pressure trunk pipeline across the country, has therefore embarked on an ambitious plan which would add another 5,000 km to this network. This will be done over three phases up to 2013 and it is expected to double the carriage capacity of the company from the present 155 mscmd to 300 mscmd.
GAIL is a major player in gas transportation. What is the present status of pipeline projects and investment proposed?
The Ministry of Petroleum and Natural Gas has approved five new natural gas pipelines. These are the 610 km Dadri–Bawana–Nangal pipeline through UP, Delhi, Haryana and Punjab, the Chainsa–Gurgaon–Jhajjar–Hisar pipeline through Haryana and Rajasthan (450 km), the Jagdishpur–Haldia pipeline through West Bengal, Jharkhand, Bihar and UP (2,050 km), the Dabhol–Bangalore pipeline passing through Maharashtra and Karnataka (1,389 km) and the Kochi–Kanjirkkod–Bangalore/Mangalore pipeline through Kerala, Tamil Nadu and Karnataka (1,114 km).
More From This Section
In addition, GAIL will augment the capacities of two existing pipelines, viz. Dahej (Gujarat)–Vijaipur (Madhya Pradesh) and Vijaipur–Dadri (Uttar Pradesh). The estimated investment on these would be nearly Rs 20,000 crore.
What is the present status of the GAIL-RIL tie-up for gas transmission?
GAIL and Reliance Gas Transportation Infrastructure Ltd (RGTIL) had signed an agreement for transmission of natural gas from the Krishna-Godavari (KG) basin, in the year 2007. GAIL currently has a network of over 7,200 km, with transmission capacity of about 155 mscmd. The utilisation of the pipeline asset would be increased by such an arrangement. RGTIL has already laid a 48-inch (diameter), 1,400 km-long east-west pipeline from Kakinada to Gujarat and is ramping up supply through this system.
The gas transmission agreement is a sequel to the Memorandum of Understanding (MoU) signed between the two companies earlier for cooperation in identified areas in the natural gas sector. The MoU envisaged that the two companies would formalise the arrangements for cooperation through agreements and contracts in specific areas.
What are the plans for city gas distribution?
City gas distribution is one of the promising areas for natural gas utilisation. It is due to this reason that we have established a wholly owned subsidiary called GAIL Gas Ltd, to concentrate on this important segment. It is already implementing CGD projects in four cities – Dewas (MP), Sonepat (Haryana), Meerut (UP) and Kota (Rajasthan). The total planned capex for these four cities is around Rs 900 crore and nearly four mscmd would be supplied. In addition, the company is also setting up CNG stations along national highways. GAIL Gas has identified over 200 cities contiguous to existing/upcoming pipelines, which it hopes to serve in the coming years.
Have regulatory hurdles been overcome in the implementation of city gas distribution?
Some regulatory issues remain to be sorted out and GAIL would not like to comment at this stage.
What are GAIL’s plan to tap opportunities abroad?
GAIL is exploring business opportunities in the gas value chain in several areas abroad. Apart from the ongoing E&P activities, we are also exploring investment opportunities in E&P and LNG projects in Papua New Guinea and holding discussions with the Ghana National Petroleum Corporation for participating in gas infrastructure development projects in Ghana. GAIL has a wholly-owned subsidiary company, GAIL Global (Singapore) Pte Ltd and has incorporated its first joint venture abroad, GAIL China Gas Global Energy Holdings Ltd. GAIL and China Gas are equal partners in this venture, which has been registered in Bermuda. In order to expand business in the fast-growing downstream Chinese gas sector, the company will pursue opportunities in CNG, city gas, pipeline, CBM, LNG and E&P projects.
GAIL has equity participation in three retail gas companies in Egypt and China Gas Holdings and is also looking at opportunities across the gas value chain in Africa, Russia and the CIS countries.