Reliance In Talks To Join Unocal Pipeline Project
Reliance Industries is considering participation in US oil and gas major Unocal Corporations ambitious transnational crude oil pipeline project.
The project will transport crude from the oil-rich regions of central Asia to Afghanistan and Pakistan. Reliance, which is building Asias largest refinery at Jamnagar, Gujarat, may participate in the project.
The $5.3 billion Unocal has already signed a preliminary agreement to build a pipeline from Turkmenistan in central Asia to an export terminal on Pakistans coast.
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A Reliance spokesperson said there were no concrete plans of participation yet. However, if Reliance eventually steps into the project, it will continue its tradition of envisaging and executing gigantic projects. Last year, the company commissioned one of Asias largest naphtha-cum-natural gas crackers and next year, it is slated to inaugurate a huge single feed refinery cum petrochemical complex at Jamnagar.
The project is probably an extension of the pipeline project proposed by Unocal, oil industry consultants said. The exact nature of Reliances participation in the project is not known. A Unocal team was in India recently for talks on the issue, but sources said the talks were still at a preliminary stage.
The central Asia pipeline is part of Unocals golden arc project, and will supply natural gas as well as crude to India. Unocal has access to reserves of more than 9.87 trillion cubic feet of natural gas (equivalent to 1.6 billion barrels of oil) and is involved in several major oil production activities in Asia. Apart from the crude pipeline, Unocal is also planning a large natural gas pipeline from
Turkmenistan through western Afghanistan and Pakistan to India. It is planning a similar project in the east, which will transport gas from Myanmar to India via Bangladesh.
Reliance is in talks with Unocal to join the consortium led by the latter. Industry sources said transporting crude oil through a pipeline is far cheaper than shipping it in tankers. If it decides to join Unocal, Reliance could use the pipeline for its refinery requirements instead of depending upon the volatile west Asian supplies. The Jamnagar project is expected to go on line by early 1999.
Sources said Reliance is discussing the feasibility of three crucial elements of the project distance, cost and the amount of crude to be transported with Unocal.
Before the pipeline gets completed, Reliance could also buy interim crude from Unocals oil blocks, which the latter recently bagged near Karachi. Unocal has also entered into an exploration agreement on the Middle Indus gas trend (covering approximately 4.5 million acres) in Pakistan.
Considering the unstable political situation in Afghanistan, Reliance has also proposed to use the port facilities at Jamnagar to import crude from Karachi in Pakistan, industry sources added.
If the central Asian pipeline comes through, it will brighten the prospects of a natural gas pipeline from Iran to India through Pakistan. If the pipeline projects come through, the fuel they supply will directly compete with high-cost liquefied natural gas, said sources.