The Hindu Business Line : GAIL in talks to secure LNG for Dabhol

Talking to the media here on Wednesday, the Chairman and Managing Director, Mr Proshanto Banerjee, said this would ensure that the target of September 2006 for Ratnagiri Gas and Power Pvt Ltd (RGPPL) to commence production can be met.

"We are in talks with Australia, Malaysia, Oman, Qatar and Abu Dhabi to source LNG. These are for 20-year supply contracts. I see no reason why we cannot start production as scheduled," he said, after inaugurating an Air Pollution Research and Disease Diagnostic Centre at the King Edward Memorial Hospital here. This is the first of 22 such centres being sponsored by GAIL across the country.

The Dabhol power project came with inherent strength, as there was no need to look for buyers, enjoyed a sales tax waiver and there was no cost added on account of transmission, the GAIL Chairman said. GAIL and NTPC are the promoters of the special purpose vehicle, RGPPL, that has been set up to revive the 2,184 MW Dabhol power plant.

Mr Banerjee admitted that GAIL had trained its guns on China in a big way, as it was looking at E&P activities there along with China Petroleum and Chemical Corporation (Sinopec Corp). This was in addition to the mutuality of interest expressed by the two entities in jointly pursuing a petrochemicals venture in China, he said.

GAIL is one of the few Indian companies to hold equity in a Chinese company - it owns about 10 per cent stake in China Gas Holdings, a company listed on the Hong Kong Stock Exchange with a market capitalisation of around $290 million — and enjoys monopoly operating rights in China's gas sector. Interestingly, one of the equity holders of China Gas is Sinopec.

Mr Banerjee said the plan was to get into various Chinese cities in joint venture with China Gas. At present, the Chinese holding company has been awarded concession to distribute gas in 49 cities, of which only about 20 or so are operational.

"We are in talks for equity participation in cities like WuHu and YuChan. Both have operational distribution networks. We are looking at Beijing, though it already has Beijing Gas. GAIL is also looking at greenfield distribution," Mr Banerjee said.

GAIL is mulling the option of joining hands with Gaz de France for creation of underground gas storage facilities, both for strategic and commercial reasons, he said. Various options were under consideration, including the conversion of depleted gas fields for storage, he said.

To scale up CNG network: In the domestic market, GAIL is planning to scale up its CNG network to over 20 cities in the next five years. While the existing network will be sufficient to accommodate some 10 cities, the rest would have to wait another three years, said Mr Banerjee.

While some cities may have to wait for the monetisation of gas finds in the east coast, those on the west will have to fall back on LNG imports, he said.

"GAIL is planning to promote gas as a fuel for airconditioning in India. Once this takes off, the domestic demand for gas will pick up significantly," Mr Banerjee said.

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