RIL's 4 trans-country gas lines well behind schedule

Reliance Industries Ltd’s (RIL) four gas pipelines are likely to be delayed. Envisaged with an investment of Rs 20,000 crore, these were scheduled to be completed by 2012.

The ministry of petroleum and natural gas had, in 2007, issued authorisation to Reliance Gas Transportation Infrastructure Ltd, an RIL group company, for four trunk pipelines — Kakinada-Haldia (1,100 km), Kakinada-Chennai (445 km), Chennai-Bangalore-Mangalore (600 km) and Chennai-Tuticorin (670 km).

When asked, an RIL spokesperson did not respond. RIL, the country’s biggest gas producer, already operates the 1,440-km, east-west pipeline, the country’s longest gas transportation one, from Kakinada in Andhra Pradesh to Bharuch in Gujarat.

A senior official said the company was required to complete the pipeline within 36 months of the notification of Expression of Interest or 24 months from the date of 100 per cent availability of Right of User (RoU), whichever is later.

While RIL is still obtaining the Rights of User (RoUs) at some locations, it has currently undertaken only a survey of the second pipeline from Kakinada to Chennai and has not initiated acquisition of land and civil works. “It takes 18-24 months to finish the pipeline after the process of acquisition of RoUs, which RIL began in 2009 and is still going on. It is a fact that they have not started work on ground but they are obtaining the ROUs at the same time. Perhaps the company is apprehensive about the gas availability at present to expand the pipeline network,” a senior ministry official told Business Standard.

According to industry experts, another reason for the delay could be that RIL is not able to pump gas to full flow from its gas fields in the Krishna-Godavari basin. Due to low well-head pressure and as a precaution on future gas availability, the company has slowed plans on expanding the pipelines. RIL had earlier conveyed to the Directorate General of Hydrocarbons its inability to raise production beyond 60 million standard cubic metres of gas per day (mscmd)

Last month, RIL produced around 58 mscmd from its D1 and D3 gas fields and the MA oil field. While around 50 mscmd was produced from D1 and D3, around eight mscmd was produced from MA. Of the 22 wells approved in phase one, 18 wells have been drilled and completed in the D1 and D3 fields. A gas sale and purchase agreement (GSPA) has been signed with 48 customers for 61 mscmd in the fertiliser, power, city gas distribution, steel, LPG, refinery and petrochemical sectors.

RIL also has an ongoing case in the Supreme Court, filed by 52 land owners from Surat, Gujarat, seeking adequate compensation from RIL for using their land for laying gas pipelines to transport natural gas from the K-G basin to Gujarat.

The pipelines are supposed to meet the gas demand of various companies, including Iffco in Nellore and MFL in Chennai, industrial and city gas distribution demand in Chennai and adjacent regions.

It will also supply gas to Southern Petrochemical Industries Corporation’s fertiliser complex in Tuticorin and to Karnataka Power Corporation’s unit in Bangalore, with a tap-off near Chennai on the proposed pipeline. The pipeline would also be operated on a common carrier basis and provide access to third parties.

A delay in execution means RGTIL may have to face action. “RGTIL was asked to advance the 2012 deadline for the completion of its four-trunk pipeline projects. In case of delay in execution of these projects, the performance guarantees may have to be forfeited, and issue of fresh authorisations through the bidding process may have to be considered,” the senior ministry official added.

The official added that RIL had earlier been directed to revisit its schedule and advance the completion dates, especially for the Kakinada-Howrah pipeline, as the completion of GAIL’s Jagdishpur-Haldia pipeline is linked to it. The company had then set the third quarter of 2012 as the target for completing it.