The Telegraph
Since 1st March, 1999
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Numaligarh in talks to buy gas from OIL

New Delhi, July 5: Numaligarh Refinery (NRL) has initiated talks with Oil India Ltd (OIL) to buy natural gas from the Duliarjan gas field for the captive power generation plant at the refinery which currently uses naphtha as a fuel. NRL is keen to substitute cheaper natural gas for the more expensive naphtha.

OIL has in-principle agreed to supply 1 million standard cubic metres of gas per day to NRL from the new discovery of gas that it has made at Duliarjan.

Sources disclose that Bharat Petroleum Corporation chairman-cum-managing director S. Behuria met the OIL CMD in the capital on Thursday and discussed the issue. NRL is a subsidiary company of BPCL.

The two CMDs have agreed to set up working groups to thrash out the cost and other finer details for the deal. The move promises to be a win-win situation for both companies. It is difficult to evacuate natural gas to distant markets as pipeline infrastructure has to be put in place which increases the cost of marketing. Since NRL is located fairly close to the field, it provides an ideal outlet for the extra gas as a relatively short pipeline is needed to deliver the gas.

NRL will gain by substituting cheaper gas for the more costly naphtha which can then be sold in the open market. The refinery uses around 3,000 tonnes of naphtha each year as fuel for its power generation plant. This will now be diverted for sale as a final product and could contribute as much as Rs 30 crore towards the sales revenue of the company.

The 600 km Numaligarh-Siliguri pipeline is being put in place for evacuating NRL products to feed the energy deficient eastern markets of the country. The higher flow of naphtha through this pipeline will also improve the economies of the Rs 660-crore project. BRPL is also likely to use the pipeline for evacuating its products which will further increase the throughput.

The pipeline will be used to transport liquid petroleum products such as diesel, petrol, kerosene and naphtha. The fuels are sent in separate batches. The sequencing of despatches is ensured in such a manner that the higher distillates precede the lower distillates so that the quality is not affected by any traces that may be left behind.

The natural gas price in the country is currently capped at Rs 2,850 per thousand cubic metres but this price is likely to be increased as the matter has been referred to the group of ministers. The ministry of petroleum and natural gas has pitched in for a price of Rs 3,850 but this has been strongly opposed by the power and fertiliser ministries which are not willing to go beyond Rs 3,100 per thousand cubic metres. According to current indications, the new price is likely to be benchmarked around this lower figure.

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