The Telegraph
Since 1st March, 1999
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Delhi looks beyond oil giants

New Delhi, Nov. 11: Delhi is looking beyond Indian Oil and the Oil and Natural Gas Corporation (ONGC) for supply of gas to get the long-delayed Assam gas cracker project off to a start.

The project, envisaged in the Assam Accord of 1985 and to be executed by Reliance, has been delayed because of wrangling between the company and the potential gas suppliers. Reliance has not signed an agreement with either Indian Oil or the ONGC.

As pressure mounts on the Centre to begin the project, Gail (India) Ltd has come into the picture. The company, which has been asked to submit a report on the project, is believed to be working on a plan that envisages sourcing gas from an offshore field in Myanmar.

If everything goes according to plan, the gas major will begin drilling the field by the end of this month and the commercial viability of the proposal to source gas from Myanmar is expected to be known in about four months’ time.

The gas major had submitted a report compiled by the Engineers India Ltd (EIL) to the ministry of petroleum and natural gas in June, but has since revised its estimates.

“The estimates in the EIL report were found unfeasible. So we are reworking the blueprint and are hopeful that the Myanmar project will see the light of day. The chances of discovering gas there are quite high. Based on our findings, a fresh report will be submitted,” Gail chairman-cum-managing director Prasanto Banerjee said.

An inter-ministerial monitoring group cleared the proposed gas cracker project at Lepetkata, in Upper Assam, in November 1992.

However, Delhi has been unable to take a decision on the proposed subsidies — amounting to approximately Rs 6,500 crore — for supplying gas and LPG at the fixed rate of Rs 600 per thousand cubic meter for a period of 15 years.

Ethane and propane are the primary feedstock for a gas cracker unit, while the main product is ethylene. The norm is that the minimum output should be five lakh tonnes per annum. However, according to current estimates, the Lepetkata plant will be able to produce only two lakh tonnes of ethylene.

“If the output is below the norm, the cost of production shoots up. That is why our model will be different, one that is based on realistic estimates,” a Gail official said.

On Indian Oil agreeing, in principle, to supply LPG, the official said: “That component will be eliminated from our report.”

There are four gas cracker plants in the country. The one in Uttar Pradesh is under Gail.

The new offshore block (A-1) that the company is planning to explore is near the Myanmar-Bangladesh border and spans 3,885 square km. Gail’s long-term plan is to link the field with the proposed gas grid.

The ministry of petroleum and natural gas is, however, cautious about Gail’s foray into Myanmar. “Everything depends on the outcome of the drilling operation. Even if gas is found, it will have to be examined to find out whether it falls in the rich or lean category. Subsequently, the economics of laying the pipeline will have to be worked out, which might again take time,” an official said.

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