Ril Plan To Break Impasse On Assam Gas Cracker

RIL managing director Anil Ambani told the petroleum ministry and the Assam government in New Delhi last week that the ministry's suggestion that the separation plants (which will separate the rich and the lean gases) should come up as a joint venture between the promoter and a public sector undertaking was not acceptable to the company.

Ambani said Reliance would not like to enter a joint venture since the Gas Authority of India Ltd (GAIL) had already invested in a separation plant at Lakwa, about 100 km from the Assam Gas Cracker site. However, he said the company was ready to take the C2+ fractions from GAIL, provided the price was viable.

 

As regards the other separation plant in the oil township of Duliajan, Ambani said since Oil India, which was supposed to set it up, has not made any investment so far, Reliance would like to implement it on its own. He said taking over the Lakwa separation plant for price arrived at with GAIL was also an alternative.

The Reliance MD, in another suggestion, said the company was prepared to let Oil India and GAIL set up the two separation plants and give the C2+ fractions to them at a price based on Rs 600 per 100-cubic metres of gas as applicable in the North-East. He made it clear that the price had to be viable for the project.

On the second option, in which Reliance wants to know the price structure of Oil India and GAIL, the petroleum ministry has directed the two public sector companies to supply Reliance with their gas price structures within a fortnight.

On Reliance's suggestion of supply of gas from central points at rates viable for the project, petroleum secretary V Kelkar said Reliance will have to bear the cost of the pipeline network. Oil India sources say that since the oil fields in the area are scattered, the pipeline network will involve an expenditure of Rs 70 crore.

Reliance has rejected this proposal saying that the cost of the network will make the gas cracker unviable. A commitment on the feedstock for production of 300,000 tonnes of ethylene per annum, as stipulated in the letter of intent, is yet to be made by the petroleum ministry.

At the meeting in New Delhi, Oil India and GAIL representatives said that between them they could be able to make available gas for production of 230,000 tonne of ethylene per annum. The petroleum ministry, therefore, came up with the suggestion that the project should be based on a feedstock mix of Gas and Naphtha.

Ambani said RIL has no objection to the suggestion but the project capacity has to be increased to at least 400,000 tonnes per annum.

If the capacity increase is cleared, a commitment for an additional feedstock of 600,000 tonnes of naphtha will be required, RIL said.

Although the foundation stone of the project was laid by then prime minister P V Narasimha Rao on November 24 last year, work has not started on the project due to the disputes over the ownership of the gas separation plants and the feedstock issue. On the whole, the project seems to have been delayed due to the red tape.

The Centre has not yet transferred the letter of intent in the name of Reliance Assam Petrochemicals Ltd, the promoter of the Assam Gas Cracker project.