Date:31/05/2007 URL: http://www.thehindubusinessline.com/2007/05/31/stories/2007053104020300.htm

Reliance, GAIL sign gas supply, marketing pact

Our Bureau

New Delhi May 30 Reliance Industries Ltd has further cemented its ties with GAIL (India) Ltd by inking the final agreement to transport, supply and market gas.

According to sources, a gas sale and purchase agreement (GSPA) and a gas transportation agreement (GTA) was signed between the two companies late last week.

This agreement comes in the backdrop of an understanding reached between the two companies earlier this year for co-operation in gas sector.

While the agreement will enable RIL to use GAIL's pipeline network in Andhra Pradesh, Madhya Pradesh and other States, GAIL would get to market a portion of RIL's gas from the Krishna Godavari Basin (D6 block).

Elaborating on the deal, sources said that the GTA enables Reliance to book capacity in GAIL's pipeline network - KG Basin, Dahej Uran Pipeline Project and the Dabhol-Panvel, Hazira-Bijapur-Jagdishpur and Dahej-Vijaipur Pipelines.

On the other hand, the GSPA provides GAIL the right to market a portion of RIL's gas from the KG Basin.

To begin with, RIL will supply GAIL with five million standard cubic metres per day of gas for marketing to consumers in North India.

Sources said that there has been no decision on the price of the gas.

However, indications are that the price, at the landfall point in Kakinada, has been agreed at $4.25-4.75 million British thermal unit (mBtu).