Cairn keen on city gas distribution in Rajasthan

MUMBAI: Cairn India, the country’s largest private-sector oil producer, is keen to start city gas distribution in Rajasthan as it sees a huge natural gas potential in its block.


The company, which has discovered huge oil reserves in the Barmer region of the state, is keen to partner Rajasthan State Petroleum Corporation’s (RSPCL) joint venture with Gail India for the new business, while the state government is supportive of the plan. A government official said a decision would be taken shortly.

“Cairn has written to us and we are evaluating its proposal to partner with RSPCL and Gail and could take a final decision by this month-end. The company could be a good fit as the original contours of the JV between RSPC and Gail did envision a 50% contribution from private investors,” Sudhansh Pant, secretary, petroleum and mines, Rajasthan, told ET.

Last November, RSPCL and Gail agreed to form a joint venture, Rajasthan State Gail Gas Company, where RSPCL is the nodal agency and facilitates Gail in acquiring land for city gas infrastructure. In the joint venture, Gail has a 26% stake while RSPCL has a 24%.

“To start with, we plan to use Gail’s existing pipeline infrastructure to transport and market the gas, and once production picks up we could also look at tapping customers across the country and think of new pipeline projects,” said Pant. “The new company will also bring pipelines from the existing trunk line of Hazira-Vijaipur-Jagdishpur in the state and we will also bid for CNG stations in the PNGRB auctions,” he added.

He did not divulge financial details. “All the financial discussions still need to be finalised, but we are very excited about the potential of gas production and marketing in Rajasthan. It’s difficult to quantify the amount of gas available right now, but we believe it could be equivalent to oil,” said Pant. In a letter to CK Mathew, chief secretary, Cairn’s CEO P Elango says: “This partnership makes perfect sense for Cairn as it would give us a platform to develop the infrastructure to produce, transport and market gas in the state as we believe that there is immense potential to develop gas resources in the Barmer block,” said a source close to Cairn India.

“We plan to unlock a lot of this potential by drilling close to 100 wells over the next two years and are planning to invest .`6,000 crore over the next few years in the Barmer block,” he added.