New Delhi, July 17: Numaligarh Refinery (NRL) has agreed to pick up 1 million standard cubic metres of gas per day from Oil India’s newly discovered field being developed in Assam.
The agreement was signed here between Bharat Petroleum (BPCL) chairman S. Behuria on behalf of NRL and OIL chairman R. K. Dutta. NRL is a subsidiary of BPCL.
The gas field is situated about 240 kms from NRL and the gas will be supplied through a pipeline by the state government-owned Assam Gas Supply Company. The gas is expected to start flowing to NRL by 2006.
NRL will use the gas for captive power generation and for its hydrogen plant. The gas will be a cheaper substitute for the 250,000-tonnes of naphtha that is currently being used.
Part of this surplus naphtha could be converted into petrol while the rest can be sold in the open market bringing in higher revenues for NRL.
NRL plans to set up a “reformer unit” at an investment of Rs 300 crore to convert naphtha into petrol.
OIL has an advantage that it will be able to sell its gas to a nearby unit at the market price. Gas from the older fields of ONGC and OIL can be sold only at regulated prices that are far below the market price. However, the government rules allowed public sector companies to sell gas from any new field that they discover at market prices. At present, only private companies get a market price for their gas.
Sources said that the exact price at which the gas from the OIL field will be sold is still being negotiated but it will be benchmarked to the price that private companies are currently getting for their gas.
OIL expects to produce another 2 million tonnes of gas per year from its new finds in Assam. However, it is reliably learnt that the gas struck in these new fields is methane, which can be made available only for power generation in the state and cannot be used as feedstock for a gas cracker plant.
The new finds will, therefore, have no impact on the feasibility of the gas cracker plant proposed for Assam, which would require ethane as a feedstock.
A senior OIL official told The Telegraph that in another two years, the company will be able to provide an additional 5 to 10 million standard cubic metres per day (MMSCMD) of natural gas from the newly discovered fields. This includes the one trillion in-place reserves struck at Chandmari.
With the gas output of ONGC's Mumbai High fields falling, the oil companies are unable to meet the demand for gas in the country. The country has now started importing liquefied natural gas to fill this gap. However, this gas is more expensive than the domestic gas as it has to be first liquefied and imported on board costly cryogenic ships and regassified on arrival.
