GAIL, Reliance to Team Up in Gas Sector

Gail India Ltd and Reliance Industries Ltd (RIL) on Thursday signed a Memorandum of Understanding (MoU) for cooperation in the gas sector.

The areas of joint cooperation identified are: Natural Gas-Pipeline Transmission and Marketing, CBM Gas Opportunities, City and Local Gas Distribution, Operations and Maintenance (O&M) services, Exploration & Production and Technology and Knowledge Sharing.

Under the MoU, the two companies will now work out the modalities for transportation of natural gas from the various gas sources of RIL in Krishna Godavari and Mahanadi basins on the east coast through pipeline and long-term arrangements with regard to gas supply and distribution. Wherever there is capacity available in the existing pipeline of the company, the same shall be available on the principle of common carrier for better utilization of pipeline capacity.

Describing the development as a major event, Dr. U D Choubey, GAIL's CMD said, "This is a turning point for both the companies. It is also a reinforcement of the concept of working together in the natural gas sector. This MoU is the beginning of cooperation in the areas of pipeline and evacuation of natural gas from various fields." He emphasized the need to synchronize the activities of producers, transporters and end users and assured that GAIL will provide pipeline connectivity to the Reliance gas fields within the shortest possible time.

The framework of the MoU emphasizes the need for both companies to examine the complementary nature of their facilities and build cooperation around them for mutual benefit. The agreement has the potential to provide gas GAIL for utilizing its transmission capacity while at the same time assisting RIL to evacuate its natural gas.

Under the MoU, GAIL and RIL will discuss cooperation in the development of a gas grid and examine opportunities that may be available for optimal utilization, sharing and inter-connectivity of their respective, existing and planned transmission and distribution networks.

The MoU also provides for cooperation between GAIL and RIL in the purchase, sale, swap and marketing of gas and import of gas through transnational pipelines. Further, the two companies shall share pipeline capacity in Andra Pradesh, Maharashtra and Gujarat on mutually agreed terms. Its has been recognized today that city gas distribution in India will be one of the major growth segments in the next 5-10 years and the MoU envisages both companies working in this area also.