Reliance Gas Transportation Infrastructure (RGTIL) is reluctant to build two pipelines it had planned because no gas has been allocated, but it wants to hold on to the licence for the projects, which would become attractive if Reliance imports LNG, a source close to the company said.
The company, privately owned by Mukesh Ambani and other promoters of Reliance Industries, was planning to build the pipelines to transport natural gas from the Krishna Godavri basin to various industrial hubs in southern India.
RGTIL was granted the licence in 2007 to build these pipelines originating from Kakinada, the land-fall point of the D-6 block, which has India’s largest gas field. One pipeline will take gas to Vizianagaram and Srikakulam, while the other would head for Ennore, Nellore and Chennai.
“No gas has been allocated to these particular pipeline projects so there is no business case for building these pipelines as RGTIL has to be able to monetise the infrastructure that it invests in,” said a source close to RGTIL. These lines are a part of RGTIL’s two trunk lines that run from Kakinada to Haldia (1,100 km) and to Chennai (445 km).
“Apart from allocation, gas production at the KG basin is much lower than what RGTIL had envisaged earlier as apart from the production shortfall at RIL’s KG D6, other players operating in the KG basin have also not delivered,” the source said. At RIL’s KG D6 basin, output is down from 53 million standard cubic metres per day in March last year, to below 49 mscmd in the first week of May 2011.
Last month, the Petroleum and Natural Gas Regulatory Board (PNGRB) had questioned RGTIL on its failure to start pipe-laying works for these two pipeline projects and asked RGTIL to explain in 15 days why its licence to build and operate these pipelines should not be cancelled. “We did ask for an explanation from RGTIL and the company responded by saying that they will submit quarterly progress reports on these two projects and soon we will also be conducting an independent review of the progress of these two pipeline projects,” said L Mansingh, chairman, PNGRB. When asked about these progress reports, the source close to RGTIL said: “Yes, RGTIL is submitting reports on the pre-project work done for these two pipelines.”
Mr Mansingh also told ET that the Andhra Pradesh Gas Infrastructure Corporation (APGIC) had submitted an expression of interest to build these two pipelines as RGTIL was going slow on these projects: “The APGIC had submitted an EoI to us to build these pipeline projects around 5-6 months back and RGTIL had raised their objections against it.”
The source close to RGTIL said: “Of course, RGTIL will protest as it has the original licence to build and operate these pipelines.” PNGRB is yet to take a final decision on the matter.
“There might be a case to revisit these pipeline projects if RIL decides to import LNG and build an LNG terminal,” said the source close to RGTIL.
The company, privately owned by Mukesh Ambani and other promoters of Reliance Industries, was planning to build the pipelines to transport natural gas from the Krishna Godavri basin to various industrial hubs in southern India.
RGTIL was granted the licence in 2007 to build these pipelines originating from Kakinada, the land-fall point of the D-6 block, which has India’s largest gas field. One pipeline will take gas to Vizianagaram and Srikakulam, while the other would head for Ennore, Nellore and Chennai.
“No gas has been allocated to these particular pipeline projects so there is no business case for building these pipelines as RGTIL has to be able to monetise the infrastructure that it invests in,” said a source close to RGTIL. These lines are a part of RGTIL’s two trunk lines that run from Kakinada to Haldia (1,100 km) and to Chennai (445 km).
“Apart from allocation, gas production at the KG basin is much lower than what RGTIL had envisaged earlier as apart from the production shortfall at RIL’s KG D6, other players operating in the KG basin have also not delivered,” the source said. At RIL’s KG D6 basin, output is down from 53 million standard cubic metres per day in March last year, to below 49 mscmd in the first week of May 2011.
Last month, the Petroleum and Natural Gas Regulatory Board (PNGRB) had questioned RGTIL on its failure to start pipe-laying works for these two pipeline projects and asked RGTIL to explain in 15 days why its licence to build and operate these pipelines should not be cancelled. “We did ask for an explanation from RGTIL and the company responded by saying that they will submit quarterly progress reports on these two projects and soon we will also be conducting an independent review of the progress of these two pipeline projects,” said L Mansingh, chairman, PNGRB. When asked about these progress reports, the source close to RGTIL said: “Yes, RGTIL is submitting reports on the pre-project work done for these two pipelines.”
Mr Mansingh also told ET that the Andhra Pradesh Gas Infrastructure Corporation (APGIC) had submitted an expression of interest to build these two pipelines as RGTIL was going slow on these projects: “The APGIC had submitted an EoI to us to build these pipeline projects around 5-6 months back and RGTIL had raised their objections against it.”
The source close to RGTIL said: “Of course, RGTIL will protest as it has the original licence to build and operate these pipelines.” PNGRB is yet to take a final decision on the matter.
“There might be a case to revisit these pipeline projects if RIL decides to import LNG and build an LNG terminal,” said the source close to RGTIL.
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