Oil, gas prices to stay high for now, hopes for relief ahead: Gail Chairman

Chairman also expected that the Union Budget would give relief on compression charges on CNG and some steps are taken to bring natural gas under the GST coverage

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Expecting the second term of US President Donald Trump to be overall good for the energy sector, public sector major GAIL India's chairman Sandeep Kumar Gupta has said that any softening in oil and gas prices may still take some time. 

Speaking with PTI here during the World Economic Forum Annual Meeting, Gupta also said GAIL is looking to scale up its capital expenditure in the next 3-5 years to Rs 10,000-12,000 crore as work is underway on several gas pipelines and other projects. 

He also expected that the Union Budget would give relief on compression charges on CNG and some steps are taken to bring natural gas under the GST coverage. 

Asked about the impact of Trump's second presidency, Gupta said, "President Trump is committed to more energy for the US. He has already declared an energy emergency whereby he wants more oil and gas to be explored so that there is energy efficiency in the US. 

"While this bodes well for oil and gas sector with more availability of oil and gas which will definitely ease pressure on the prices but this will take time because presently all the Liquefied natural gas (LNG) export facilities were on pause by the Biden administration. 

"So lifting those pauses and putting these projects will take time. So the softness in the prices will take some time. For the time being these higher prices will rule," Gupta said. 

Talking about his company, Gupta said, "We are the largest natural gas pipeline of the country and we have already laid lion's share of the existing natural gas pipeline of the country. In the current year also, we are completing many pipelines." Gupta also exuded optimism about GAIL's growth, as he talked about the company's projects in the pipeline. 

"We are working on Kochi-Mangalore-Bangalore pipeline where the Tamil Nadu section was pending. Work on the Gurdaspur-Jammu pipeline is on. A lot of pipeline projects are underway. 

"We have presence in petrochemicals too. Our project at Usar is the country's first Propane Dehydrogenation Polypropylene unit will hopefully get completed this year.  We have acquired PTA facility from erstwhile JBF petrochemicals at Mangalore, which is a 1.25 million tonne PTA project. That will also get commissioned this year. Then we will have 3 million tonne petrochemical capacity in the country," Gupta said. 

Besides, we have a declared net-zero plan and we have actually advanced that from 2040 to 2035, entailing an expenditure of Rs 38,000 crore, the chairman said. 

"Put together, the present capex which is about Rs 8,000-10,000 crore a year, we will scale it up to about Rs 10,000-12,000 crore in the next 3-5 years," he said. 

Talking about his expectations from the Union Budget to be presented on February 1, he said, "As a natural gas company, my first expectation would be removal of compression charges on CNG activity. We believe that it is not a manufacturing activity and it is a great burden on us and ultimately on the consumers.So I expect the 14 per cent excise duty on compression is removed immediately."  "While the coverage under GST is not in purview of budget but under the GST Council, I hope some steps must be taken so that natural gas can be covered under GST," he said.