GAIL to invest Rs 15,000 cr to lay pipelines

GAIL India will invest about Rs 15,000 crore (Rs 150 billion) over the next 2-3 years in laying pipelines to connect consumption centres in North India to fuel sources.

Addressing a meet organised by PHD Chamber of Commerce and Industry in New Delhi, GAIL chairman and managing director B C Tripathi said his company was laying new pipelines to connect cities like Uttar Pradesh, Uttrakhand, Punjab and Haryana.

Pipelines are planned to connect cities like Meerut, Saharanpur and Moradabad in UP, Dehradun in Uttrakhand, Bhatinda and Nangal in Punjab and Panipat, Hissar and Gurgaon in Haryana by 2013.

"Gas demand in northern India is expected to grow at the rate of 20-25 per cent over the next 2-3 years. To meet this demand, we are investing Rs 15,000 crore in laying new lines," he said.

Besides, GAIL is expanding its 10,700 km of cross-country pipeline network. It is laying 5,000 km of pipeline to connect gas sources on the western coast to consumption centres in the north by 2013.

Of this, about 1,000-km pipeline length would be commissioned by year end and 1,500 km would be added every year over the next two years.

GAIL is also laying pipelines to connect to Bangalore, Mangalore and Kochi in next 3-4 years.

Tripathi said the share of natural gas in the energy basket will rise to 12 per cent by 2012-13 from current 10 per cent.

Current supplies of about million standard cubic meters per day is short of demand of 230 mmscmd.

Domestic gas production, he said, will rise to 170-175 mmscmd in the next 4-5 years from 135 mmscmd currently after new fields of companies like Oil and Natural Gas Corporation and Gujarat State Petroleum Corporation come online.

GAIL chairman, however, cautioned that future gas supplies may not come cheap. Liquefied natural gas from international suppliers like Qatar was available at no less than 14-15 per cent of crude oil price.

At prevailing crude oil price of $80-85 per barrel, this translates into a gas price of about $10 per barrel, more than double the rate at which Reliance Industries sells gas from its eastern offshore KG-D6 fields.

"I don't think that prices are going to come into as demand is bound to go up with the revival of world economy," he said.

"Long term LNG supplies are not available at prices at which gas is available from domestic fields."