GAIL in Pact with Mitsui for a HDPE Unit
Plans investment of 647 crore

New Delhi, Delhi, India, Thursday, July 15, 2004 -- (Business Wire India)

GAIL (India) Limited has signed a technology agreement with Mitsui Chemicals Inc., Japan, for setting up a new, dedicated high density poly-ethylene (HDPE) plant with a capacity of 1,00,000 TPA at its petrochemical complex at Pata in District Auriaya, Uttar Pradesh. The project with an estimated cost of Rs 647 crore, is scheduled for completion by April 2006.

The agreement provides the license to GAIL to set up the HDPE plant based on Mitsui's CX technology. The plant shall also have the capability to produce MDPE and PE-100 grades. GAIL already operates a HDPE plant of 1,00,000 TPA capacity based on Mitsui's technology at its petrochemical complex at Pata. With this addition, the company's present polymer capacity of 310,000 TPA will increase to 410,000 TPA with the new plant being set up. GAIL has recently completed the de-bottlenecking of its LLDPE/HDPE (swing) plant at a cost of Rs 76 crore to increase its polymer capacity to 310,000 TPA from the earlier 260,000 TPA.

GAIL has also proposed an investment of Rs 10,723 crore for enhancing its petrochemical production capacity and adding three more projects in different parts of the country. GAIL recently signed an MoC with the Kerala State Industrial Corporation (KSIDC) for putting up a Naphtha based petrochemical complex in Kasargod district near Kochi. The Rs 7000 crore integrated grass root naphtha based petrochemical complex will produce 800 KTA of ethylene and 400 KTA of propylene. GAIL has also prepared a pre-feasibility report for the Assam Gas Cracker, which will have an estimated project cost of Rs 2500 crore to produce 160,000 TPA of ethylene and a downstream unit of 160,000 TPA of LLDPE/HDPE. GAIL has already signed an MoU with Haldia Petrochemicals Ltd for setting up a joint venture styrene butadiene rubber (SBR) plant with a capacity of 100 KTA. The investment for this plant is estimated to be approximately Rs 500 crore.

GAIL (India) Limited, primarily a natural gas company, is focused on all aspects of the gas value chain including exploration, production, transmission, extraction, processing, distribution and marketing of natural gas and its related processes, products and services. Some of the additional projects underway are:

National Gas Grid: GAIL has conceptualized a National Gas Grid (NGG) to create a green quadrilateral of clean energy corridors that which will facilitate high pressure and high volume inter state movement of gas from the present and new supply locations to multiple markets. The NGG involves about 6500 km of a large-size pipeline, connecting all the four regions in the country at an estimated cost of Rs 23,000 crore. A subsequent phase will be more trunk pipelines and spur lines to support development of distribution networks in the states. The NGG will include 610 km of the Dahej-Vijaipur pipeline, which has already been completed, and 400 km of the Dahej-Uran pipeline, which is presently under implementation. In addition, the other pipelines for which a DFR has been prepared are 1060 km of the Kakinanda-Uran pipeline, 1040 km of Kakinada- Haldia, 850 km of Jagdishpur-Haldia, 1100 km of Dabhol-Bangalore-Chennai, 850 km of Kakinada-Chennai, 1475 km of Kochi-Kayamkulam-Bangalore and 560 km of Vijaipur- Kota Mathania .

LPG Pipelines: GAIL (India) Limited already owns and operates the largest LPG pipeline in the world. At present, studies are underway to construct a 100 km long network of pipelines between Porbandar and Jamnagar as well as a 140 km network between Okha and Jamnagar. The estimated cost of these projects is calculated to be about Rs 675 crore.

GAIL is considering LNG opportunities in Ennore as well as in Kayamkulam. The work for DFR is this regard is under progress. In addition to this GAIL is active in cross border gas imports in view of renewed interest in transnational gas pipelines from East (Iran gas) and West (Bangladesh / Myanmar).

Gas imports: GAIL is considering LNG opportunities in Ennore, as well as in Kayamkulam and the work for DFR in this regard is currently underway. Additionally, GAIL is actively participating in cross border gas imports, both from the east, from Iran, and the west, from Bangladesh and Myanmar.

New technologies: The company is working to convert coal reserves into synthesis gas or 'syngas' (CO+H2) by using the coal gasification process for the first time in India. In collaboration with Royal Dutch Shell, GAIL has plans to set up a Rs 800 crore coal gasification project in eastern India with a capacity of 2000 tonnes per day. According to the agreement, Shell will be the technology provider and advisor in this project and not pick up any equity.

GAIL is also studying new technology initiatives such as transport of CNG by ship, in-situ lignite gasification and hydrogen fuel cell technology. GAIL had earlier demonstrated its commitment to using the best available technology by choosing the longitudinally submerged arc welded (LSAW) technology over other options. It has been accepted that in the transmission of high pressure gas, there are specific disadvantages of helically submerged arc welded (HSAW) pipes when compared to LSAW pipes. Since the time its first pipeline was commissioned in 1986, GAIL has been procuring LSAW pipes through an international competitive bidding route while periodically reconfirming the superiority of LSAW over HSAW pipes under Indian conditions.

The cost of projects has been a major thrust area in the conception and implementation of projects in GAIL. As affirmed by Engineers India Limited (EIL), consultants for the DVPL project, the net impact of using HSAW in place of LSAW pipes would have led to a higher capital outlay of Rs 34.07 crore, translating into an increase of Rs 7 per MSCM in transmission tariff. Tractebel Engineering, Belgium, have also estimated that the project cost for the upcoming Dahej-Uran pipeline (DUPL) project will be higher by Rs 139 crore in case of HSAW pipes being chosen over LSAW.

No other gas pipeline company in the country, namely, GSPL, Gujarat Gas Company Limited, Assam Gas Company Limited and ONGC (limited to their offshore gas pipelines) use HSAW pipes in their high pressure gas trunk lines.