GAIL to use Shell Hazira terminal on toll basis

13-km long pipeline to connect terminal with GAIL network.

Gas Authority of India (GAIL) and Shell will soon sign a comprehensive agreement, which will allow the former to use the Shell Hazira LNG terminal on toll basis to import floating cargo of LNG.

Both sides have also agreed to lay down a 13-km long pipeline at a cost of $10 million, which will connect the Hazira terminal with GAIL's Dahej-Uran pipeline.

Once connected, the Shell Hazira terminal will become a part of GAIL's national gas grid and facilitate more imports of gas by GAIL.

U D Choubey, director (marketing), GAIL, said, "We will soon be signing an agreement with Shell for pipeline and the Hazira terminal. Shell will allow GAIL to import LNG to the Hazira terminal and use its facility like regasification on toll basis. GAIL will pick up floating cargos of LNG to import and fulfil domestic requirement of its customers."

He further said, "A 13-km long pipeline will be laid down to connect the Shell Hazira LNG terminal with the Dahej-Uran pipeline, which is currently being constructed by GAIL." A 475-km pipeline is under construction between Dahej and Uran at a cost of Rs 1,830 crore.

When contacted Marc Den Hartog, director, Shell India, confirmed the company's talks with GAIL. He said, "We are working on various things. The pipeline costing $10 million would be completed in 16-18 months from now, and it will be capable of flowing five million tonne of LNG."

About the Hazira LNG terminal to be used by GAIL, he said, "We are discussing this issue. However, it will be difficult for anyone to import floating LNG cargo at this time, as LNG prices are high and supply is scarce."

The pipeline connecting Hazira with Dahej will not only reduce the dependence of Shell on Gujarat State Petroleum Corporation to evacuate its gas but also put its Hazira terminal on the national gas grid. Once the Hazira terminal is connected to the Dahej-Uran pipeline, Shell will also be able to deal with GAIL clients.

This would also connect the country's both RLNG (regassified LNG) terminals "" the Dahej terminal owned by Petronet LNG and Shell Hazira of Shell "" with each other. Once in the national gas grid, Shell will also have an access to the northern markets.

In connectivity with the Shell Hazira terminal, GAIL will be able to serve its clients on the Dahej-Uran pipeline more effectively.

In January 2005, Rastriya Chemicals and Fertilisers had become the first major client of GAIL on the Dahej-Uran pipeline where both had reportedly agreed for a little over $4 per mmbtu price for 2 mcmd of gas, which is expected to flow from December 2006.

The Panna-Mukta-Tapti gas would also flow from the Dahej-Uran pipeline enabling GAIL to match expectations of the fertiliser industry to some extent, Choubey said.