KOLKATA (miningweekly.com) – Having warded off the possibility of the company being split up, State-run natural gas marketer and logistics service provider GAIL India has firmed up plans to expand its gas pipeline network.
GAIL will add 5 500 km of pipeline network to its existing 11 400 km, over the next three years, to back up the government’s plans to increase usage of natural gas as the primary fuel over the next ten years.
A large part of the additional network would be the completion of the construction of a 2 655 km pipeline connecting Jagdishpur in the northern Indian state of Uttar Pradesh to West Bengal and Odisha in the east, company officials said.
The first phase of this network was scheduled to be completed within the next three months, the officials added.
Another network has been planned connecting Bihar in the east to the north-eastern state of Assam, traversing 1 500 km, for the use of State-run oil and gas production and exploration majors such as Oil India and ONGC, which had extensive operations across north-eastern Indian states.
The plans for the pipeline network expansion followed close on the heels of GAIL deciding to hire out its natural gas transportation facilities to third-party common carriers and traders of natural gas.
As reported by Mining Weekly Online earlier, GAIL’s new business plan was to put in place offers to hire its pipeline capacities based on firm volume commitment by any third party gas transporter or trader, in response to industry complaints of GAIL leveraging its monopoly, which in the long term would be a roadblock to India creating a gas trading hub wherein traders should have free access to logistical facilities.
The hiring of pipeline capacity was put into play to avoid government’s plan to split up GAIL’s two operational verticals—gas marketing and transportation—into two separate entities to avoid a conflict of interest that would see it being a player in the proposed gas trading hub and at the same time controlling the entire transportation network.
GAIL reckoned that by expanding its network capacity, it would be able to maintain higher revenues from transporting natural gas on its own even after hiring out part of the pipeline capacity to third parties, the officials added.