GSPC-RIL ink pact to ferry natural gas

Gujarat State Petronet Limited and Reliance Industries Limited have signed a Gas Transportation Agreement to transport 11 MSMCMD of natural gas from Bhadbhut in Bharuch to RIL's Refinery and Petrochemical complex in Jamnagar.

Under this Agreement, RIL has an option to increase the volumes of gas upto 14 MSCMD. RIL would transport portion of its KG Gas from Kakinada through its East West Pipeline and deliver the same to GSPL at Bharuch. For transportation of gas, GSPL would use its existing pipeline and develop new pipelines between Bharuch to Hadala and Rajkot to Jamnagar.

The transportation of gas shall commence in II Quarter of 2008. The agreement is valid for a period of 15 years from the Start Date.

Similarly, Gujarat State Petroleum Corporation has signed Gas Transportation Agreement with Reliance Gas Transmission and Infrastructure Limited for transportation of 3.5 MSMCMD of natural gas from its largest KG basin discovery at Kakinada in Andhra Pradesh to Gujarat. As per this agreement, GSPC has an option to increase the volumes of gas upto 11 MSCMD.

For transportation of gas from Kakinada to Gujarat, RGTIL is developing a pipeline between Kakinada and Bharuch.

The transportation of gas shall commence as soon as GSPC starts the production of gas from its KG basin. The agreement is valid for a period of 15 years from the Start Date.

The Managing Director of GSPCL, Mr. D. J. Pandian, IAS, Mr. PMS Prasad, President & CEO, Petroleum Business, RIL signed the agreements in the presence of Shri Saurabhbhai Patel, Honorable Minister of Energy & Petrochemicals and Shri D. Rajgopalan, IAS, Chairman, GSPC and other officials from GSPCL, GSPL, RGTIL and RIL.

GSPC has made the largest discovery of natural gas in the KG basin two years before and the commercial production is likely to commence from mid 2009.

GSPC's KG gas being a domestic gas when it reaches Gujarat, will be available to the people of Gujarat at a competitive price as compared to the imported gas. This also will help in supplying gas on a sustainable and long term basis, to the power sector, local distribution including the household, resulting in the overall economic development of the State

This will herald a new era of prosperity as the GSPC's KG gas being the domestic gas would give some relief to build the huge demand supply gap.

The establishment of Gas Grid project in Gujarat covering 2500 kms of long high pressure pipeline is at an advances state. It has already commissioned more than 1140 kms of pipeline, which connects 13 district headquarter headquarters.

These sections of the pipeline is supplying gas to small and medium industries including ceramic industries.

Moreover following sections of the pipelines are under planning:-

· Rajkot-Jamnagar "� 110 kms

· Morbi-Mundra via Anjar, Bachchau, Bhuj and Gandhidham "� 225 kms

· Limbdi-Pipavav via Bhavnagar "� 210 kms

· Baroda-Godhra via Halol "� 40 kms

· Mehsana-Palanpur "� 110 kms

Government of Gujarat have already initiated setting up of City Gas Distribution Projects in 20 cities. As a part of this, in cities such as Gandhinagar, Hazira, Vapil, Valsad, Sarigam, Navsari, Nadiad, Chandkheda, Morbi, Rajkot, the project has already taken off. Rest of the cities like Thangadh, Bilimora, Godhra, Khambhat, Kheda, Himmatnagar, Prantij, Mehsana, Limdi, Wadhwan, Surendranagar and Bhavnagar would be taken up soon.

Within three months of commencing the City Gas Distribution project in Gandhinagar, we have connected 10,000 customers, which would replace the LPG with natural gas. This would enable the saving of subsidy of Government of India to the tune of Rs.150/- per cylinder resulting into the saving of Rs.18 crores per annum to Govt. of India. Very soon we can expect the domestic connections to go at least upto 10 lakhs which would result into the subsidy saving of Rs.180 crores to the Government of India.

Setting up of CNG stations across the state is progressing. The construction of about 20 CNG stations are progressing well and the same shall be functional very soon.

· As compared to Petrol, CNG is 61% cheaper and more stable, whereas LPG is 33% cheaper.

· CNG will be better off in terms of combustion efficiency i.e. environmentally more desirable.

· CNG will require pipeline network (Gujarat is well placed in this regard)

On arrival of the natural gas the industry would be benefited immensely in terms of the following: -

· Natural gas prices as comparatively stable for industrial applications, whereas LPG prices are volatile.

· Natural gas is 20% cheaper than LPG

· No storage is required for Natural gas whereas LPG is required storage space as well as explosive license from Explosive Department, Govt. of India.

· No logistic problem is associated with the supply of natural gas, whereas several logistic problem are associated with the LPG supply.

· Natural gas is made available through without any interruption, whereas the LPG supply is unreliable i.e. road accident, strike, etc.

· Handling natural gas is safer as compared to LPG.

· Natural gas is environmentally clean fuel.

· Natural gas is efficient fuel as compared to LPG