The initiatives in the nationâ€™s new bid to use gas as a more environmentally acceptable alternative to oil is influencing piping contractors. Mukesh Keswani, Directorâ€”Finance, Jaihind Projects, tells us how.
How will the new Rs 21,000 crore National Gas Grid figure in your companyâ€™s plans?
The natural gas sector is at the threshold of rapid growth in the country. With increased exploration efforts under NELP, large scale discoveries of gas off the east coast, commissioning of the LNG import terminals on the west coast, projected upcoming LNG terminals and the government initiatives in natural gas through transnational pipelines, there is an immense scope for our company to prove its capabilities. Our regulatory framework is also encouraging as it allots contracts in a transparent and an objective manner with a view to facilitate investments in the sector and protect the interests of consumers. Looking at the diverging trend of consumption and production, the infrastructure industry is poised to face a boost in times to come.
How will replacement of transport options for gas through pipes influence transport pricing?
The existent oil and gas transportation trends, a ratio of 70:30 (Rail, Road:Pipe) being reversed will have a dramatic impact on the transport pricing. The most important market driver for the pipeline industry is the cost economics. The industry is driven by its lower cost per unit of commodity transported and feasibility to transport higher capacities. This will remain the key advantage of transportation via pipes. As the energy consumption of this industry is low, its environmental impact is also low. The industry is also characterised by low operational costs.
Where is the growing demand from for pipesâ€”oil, gas, urban water supply, irrigation, city gas or other?
The focus area for the government as well as industry is the cross-country and regional gas pipeline segment. This segment, driven primarily by the increasing gas supply (increased production as well as new LNG terminals coming up) as well as the strong gas demand, is in fact witnessing the highest growth with expected investments of over Rs 45,000 crore over the next five years. In sharp contrast, with only a few pipelines being implemented and capacity augmentations being undertaken, the level of activity in the product pipeline and crude oil pipeline segment is limited.
What are the main issues in contracting for the pipes industry?
Pipelines are characterised by huge upfront investments and low operating costs. Some of the key areas of concern are as follows:
â€¢ Customer readiness with customers unwilling to opt for gas
â€¢ Physical interconnections of the pipelines and related capacity issues
â€¢ Technology to manage, monitor and control the gas grid as an integrated operating system
â€¢ Natural gas storage and strategic storage facilities for oil
â€¢ Pipeline integrity and pipeline safety operations and technology
â€¢ Gas transportation tariff and practices and related technologies
â€¢ Pipelines systems security from a design and operations perspective
Is the gas industry applying new technology in pipes?
On the technology front, companies have been progressively utilising improved quality steel and have moved to higher grades. Steel Grade X80 is being used instead X60 and X70 used earlier. Because of such a development, the weight of the pipes have reduced to a great extent. This is bringing a comfort in project execution for contractors. Also, we are actively making use of techniques like micro tunnelling and horizontal directional drilling, which is again a relatively new technology.