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Tug of war over rights to KG Basin gas-II: What is causing "significant adverse changes in gas demand"?
Aug 01: A worrying point that needs highlighting is the GITPL's assertion that there are "significant adverse changes in market demand" that is threatening the viability of the Mallavaram-Bhilwara-Vijaipur natural gas pipeline.
8The 1800 km pipeline will traverse through 33 districts and six states
8GITPL also claims that it will be able to cut down tariff drastically: gas from the KG basin can travel to NFL's Vijaipur plant at 25% of the current applicable tariff
8But the point is what is what has changed about gas demand in the heart of industrial India through which the pipeline winds it way?
8Clearly, demand for gas has not been found to be as buoyant as was anticipated earlier.
8The inability of cross-country pipelines in India to stay viable needs a further investigation. The market for gas is becoming more dynamic, with a plethora of competing fuels as crude prices continue to stay low.
8LPG, FO/LSHS and Pet Coke are competing with gas for the attention of dual feed furnace owners. Low cost renewable energy may also increasingly emerge as a competitor.
8Undoubtedly, India should ordinarily have an insatiable appetite for gas but when will demand emerge remains a moot point.
8Will disruptive changes -- such as lower for ever crude prices or the advent of electric car or really low cost renewable energy --  kill this demand before it emerges?
8The jury is still out on this subject.
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