IndianOil to commission its first natural gas pipeline

IOC set to open first gas pipeline by end of month


IndianOil (IOC) will commission its first natural gas pipeline by month-end. The 132-km-and 30-inch diameter pipeline from Dadri in Uttar Pradesh will supply gas to IOC's Panipat refinery.

The country's largest oil marketing company has partnered with Gujarat State Petroleum Corporation (GSPC) to bid for gas pipeline projects coming up in the country.

"IOC's first gas pipeline will start operating by month-end with an initial capacity of 1.5-2 million metric standard cubic metres per day (mscmd)," K K Jha, director (pipelines) at IOC told Financial Chronicle. On full capacity, the pipeline will flow in 10-mscmd natural -gas.

The pipeline is expected to achieve its full capacity by October, depending on the availability of gas.

Initially, the pipeline will flow regasified LNG sourced from GAIL (India). Later, natural gas from Reliance Industries (RIL)-operated D6 block in Krishna Godavari (KG) basin will be sourced through this pipeline. IOC has spent nearly Rs 300 crore to lay the pipeline.

"Domestic gas is cheaper than imported LNG. So, we are keen to buy more KG gas," Jha said. IOC has been allocated more than three mscmd of KG gas that also includes the allocation done on fallback basis.

IOC has signed gas transportation- agreement with GAIL. It is in the process of signing gas sale and purchase agreement with RIL. GAIL's pipeline will supply natural gas from KG basin to IOC's pipeline.

IOC is in the process of changing feedstock of its refineries in Koyali, Mathura and Panipat from fossil fuel to natural gas. IOC is aggressively stepping into gas pipeline business, said Jha.

"We intend to bid for any gas pipeline project in the country", Jha added.

IOC in partnership with GSPC has submitted bids for three trunk pipelines Mehsana-Bhatinda; Bhatinda-Jammu-Srinagar and Mallavaram-Bhilwara-Vijaipur-Bhopal.

Petroleum and Natural Gas Regulatory Board (PN-GRB) that had invited bids for these gas pipelines, has extended the deadline to bid till this month's end. Earlier deadline was February. When asked if IOC will partner any private players such as Reliance Gas Transportation India (RGTIL) for working on gas pipeline projects, Jha said the company is open for private partnerships depending on the projects.
- Financial Chronicle, New Delhi, May 10, 2010