Mumbai, Jan. 6: Gail India has decided to use the proposed 580-km pipeline from Vishakapatnam to Secunderabad (VSPL) to supply natural gas instead of the liquefied petroleum gas (LPG) it was originally intended for.

With companies like ONGC, Cairn Energy, GSPCL and Reliance looking at major gas finds in the Krishna-Godavari basin, Gail is examining the feasibility of transporting gas to seven cities located along the pipeline. The pipeline is nearing completion and will be ready for commissioning by the middle of this year, the company said.

Analysts said the decision to use the pipeline for transporting natural gas would be a major boost for Reliance Industries, which recently announced major finds in the Krishna-Godavari basin. Gail’s change of plans will mean huge savings for Reliance that would otherwise have had to transport the gas

The Rs 490-crore pipeline, originally meant to transport LPG from Vishakapatnam to Hyderabad and Secunderabad, will also cater to the natural gas requirements of the industrial, commercial, domestic and transport sectors in the seven cities—Vishakapatnam, Vijayawada, Amlapuram, Bhimavaram, Rajamundhry, Kakinada and Secunderabad.

Gail will develop the city gas markets prior to the availability of natural gas, through Bhagyanagar Gas, its recently formed joint venture with HPCL. The company is evaluating the option of seeding the markets in the six cities with synthetic natural gas (SNG), a mixture of LPG and air. Supply of SNG in the pilot phase of the city gas distribution project is a practice followed in South Korea, China, Argentina and Uruguay. However, once natural gas starts flowing in large quantities from the KG basin, it will replace SNG.

In addition to the pumping and boosting arrangements made for LPG, additional equipment in the form of gas compressors would be installed for facilitating natural gas transportation. Gail’s current gas grid has the flexibility of interconnection with new routes. It will soon appoint a consultant to carry out techno-economic feasibility studies of city gas distribution along the Vizag-Secunderabad pipeline.