New Delhi, March 15: Reliance Industries Ltd (RIL) will use the pipeline network of GAIL (India) Ltd to supply gas from its fields in the eastern offshore Krishna-Godavari and Mahanadi basins. The two companies also plan to join hands for city gas distribution projects.

Reliance and GAIL today signed an MoU for closer collaboration in six areas. These are natural gas pipeline transmission and marketing, CBM gas opportunities, city and local gas distribution, operations and maintenance services, exploration & production and technology sharing.

GAIL chairman U.D. Choubey said, “Any available capacity in the existing pipeline will be offered to companies on a common carrier principle. This would help in better capacity utilisation.”

He said, “About 52 per cent of GAIL’s pipeline capacity is being used and the tie-up with RIL and new discoveries by ONGC will help raise the capacity utilisation to 100 per cent and increase the company’s revenue.”

RIL is laying a 1,400-km pipeline from Kakinada to Ahmedabad to take gas from the east coast to consumption centres in the west. RIL will use GAIL’s trunk pipeline network from Maharashtra to Uttar Pradesh to take the gas to the north, the official said.

RIL also plans to lay a pipeline from Kakinada to Haldia in Bengal and may share a part of it with GAIL.

Under the MoU, GAIL and RIL will hold talks on the development of a gas grid and examine opportunities for optimal utilisation, sharing and inter-connectivity of their existing and planned transmission and distribution networks.

The MoU provides for cooperation in purchasing, swapping and marketing gas and also importing it through transnational pipelines.

Choubey said the two companies would now work out the modalities to transport natural gas from various sources of RIL in Krishna-Godavari and Mahanadi basins through pipeline. They will also work out long-term arrangements for gas supply and distribution.

Formal agreements are expected to be signed next month after the transport costs and other details are worked out.

The framework of the MoU emphasises the need to examine the complementary nature of the facilities of both companies and cooperate for mutual benefits.

P.M.S. Prasad, CEO (petroleum) of RIL, said, “The agreement has the potential to provide gas to GAIL to utilise its transmission capacity, while at the same time assisting RIL to evacuate its natural gas.”