Enron-Rils Talks With Gail For Gas Purchase Deadlocked

The talks between Gas Authority of India Ltd (GAIL) and the Enron-Reliance consortium for supply of gas from Tapti, Panna and Mukta offshore fields have got bogged down in the issue of guaranteed offtake and supplies.

GAIL is insisting on a penalty clause applicable to both the consortium and itself.

Under such a clause, the consortium will have to pay a penalty in case it fails to deliver the agreed quantity.

Similarly, the public sector company will be subjected to penalty if it does not lift the minimum guaranteed offtake.

The Enron-Reliance consortium, on the other hand, wants only a one-way penalty applicable on GAIL if the public sector company fails to lift the guaranteed quantity.

 

Conceding that there was some problem in finalising the agreement, Larry Morse, India business development director of Enron Oil & Gas, said the consortium wanted the accord to be based on the production sharing contract (PSC) signed by it with the government in 1994.

He said the consortium was ready to put the fundamentals of product sale as enshrined in the PSC into practice.

According to him, the PSC did not provide for any penalty to be levied on the supplier of gas.

Industry sources concur with Morse and point out that the PSC was defective and biased against GAIL in this regard.

The price of the Tapti, Panna and Mukta gas is linked to low sulphur fuel oil as against high sulphur fuel oil for the Ravva gas.

The price of this gas works out to around $3.1 per British thermal unit (BTU) against $2 per BTU for Ravva gas.

Meanwhile, the Oil & Natural Gas Corporation has asked Engineers India Ltd (EIL) to review the gas delivery facilities put up by the consortium at the three fields.

ONGC wants to ensure that the consortium supplies only dry gas so that it does not corrode its pipeline.

Morse conceded that Engineers India had been authorised by ONGC to review documentation concerning the facilities at the three fields.

He said the consortium had supplied all the necessary documents to EIL.