GAIL plans to connect with Shell facility

GAIL (India) and Shell India today agreed to connect the state-owned gas utility's pipeline network with Shell's liquefied natural gas (LNG) terminal at Hazira.

The two companies have signed an agreement, which will allow evacuation of regassified LNG from the Hazira terminal for supplies to GAIL's customers. Pumping of gas is expected to start soon, GAIL said.

Under the agreement, the two companies will now work out the modalities for transmission of regassified LNG through GAIL's pipeline, access to Shell's regassification facility and long-term arrangements regarding gas supply and distribution.

The agreement envisions the supply of gas to GAIL for utilising its transmission capacity, while assisting Shell to evacuate its regassified LNG.

With the Oil and Natural Gas Corporation's (ONGC) upcoming methane-propane extraction plant at Dahej in Gujarat, the Hazira-Vijaipur-Jagdishpur (HVJ) pipeline of GAIL would be starved of rich gas, rendering its petrochemical plant at Pata, Uttar Pradesh, unviable.

GAIL has been scouting for alternative sources of rich gas to feed its Pata plant and other fertiliser plants along the HVJ pipeline.

"Gas supplies from Shell's Hazira plant will give the much-needed relief to those plants once Oil and Natural Gas Corporation's Dahej plant comes up in 2009," a senior GAIL official said.

GAIL owns and operates a network of around 6,000 km of natural gas trunk pipelines with a capacity to carry 140 million standard cubic metres of gas per day (mmscmd). Currently, it transports 84 mmscmd of gas through its pipeline network.