State-owned gas utility Gail India may offer up to 30 per cent stake to IndianOil Corporation (IOC) in its 1,550-km natural gas pipeline from Surat in Gujarat to Paradip in Orissa.
This April Gail secured rights to lay the pipeline which will connect west to east coast. The pipeline would have a capacity to transport up to 60 million standard cubic meters per day of gas. Gail will have 36 months to lay the pipeline and commission the same.
"Yes, we are in talks with Gail to pick up stake in their Surat-Paradip pipeline," said a senior IOC official without divulgin details. Another senior IOC official said, against the stake offered by Gail, IOC would be able to secure some capacity in the pipeline for its own use.
A senior Gail official, confirming the development said, the The 36-inch pipeline would cost over Rs 9,000 crore and if IOC accepts Gail's offer. If IOC accepts Gail's offer, it would contribute for its share. Gail is investing $6 billion in creating Natural Gas infrastructure, BC Tripathi, Chairman, Gail had recently said.
The pipeline is to originate from Mora in Gujarat and would cover states of Gujarat, Maharashtra, Chhattisgarh and Orissa. Gail has a trunk pipeline network spanning around 11,000 km which it uses to market LNG--both domestically produced and imported-- in the country.
Indian Oil Corporation operates a network of 10,909 km long crude oil, petroleum product and gas pipelines with a capacity of 75.55 million metric tonnes per annum of oil and 10 million metric standard cubic meter per day of gas.
IOC on its website says it has planned a new pipeline projects of 2000 km worth approximately Rs 2000 crore for expanding the infrastructure for transportation of crude oil and petroleum products. These include the 700 km Paradip-Haldia-Budge Budge-Kalyani-Durgapur LPG Pipeline, 295 km Sanganer-Bijwasan Naphtha Pipeline, 270 km branch pipeline from Patna to Motihari and Baitalpur, 120 km Cauvery Basin Refinery to Trichy Pipeline and 400 km Ennore-Trichy-Pondicherry LPG Pipeline.
Gail owns and operates over 9,500 Km of high pressure cross country natural gas pipeline network and can handle 175 million standard cubic metres per day (mscmd). The company is in the process of significantly augmenting its pipeline network to reach every part of India. Within the next two to three years, Gail will have a pan-India natural gas pipeline infrastructure spanning over 14,500 km and can handle volumes over 300 mscmd.
To serve the same, Gail has been expanding its global presence to secure long term gas supplies. While earlier this year Gail signed a 20 year sales and purchase agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, US for supply of 3.5 million tonnes per year of LNG, it also executed a gas sales purchase agreement with Turkmengaz for 38 mscmd for 30 year supply through the TAPI pipeline.
GAIL has also signed an LNG supply agreements with GDF SUEZ, for supply of 0.8 million tons from 2013 to 2014, and with Gas Natural Fenosa, Spain to ensure a total supply of approximately 3 billion cubic metres of LNG to GAIL over the next three years to begin from January 2013.