Steel & Petroleum Ministries In Talks Over Gail Gas Sale To Steel Mills

An old army maxim, which is gaining currency in management courses as well is that, people continue to do what they know. Rarely do people know, at any given point in time, what needs to be done! It is the latter category of activity that can bring about gainful disruptions.

- Madhumita Mookerji

And, perhaps, the prospective use of gas in the steel industry as a substitute to coking coal could bring about positive disruptions.

The Ministry of Steel (MoS) and the Ministry of Petroleum and Natural Gas are in talks to explore opportunities for selling surplus gas offered by the Gas Authority of India (GAIL) to the steel industry, Syedain Abbasi, Joint Secretary, Ministry of Steel, told Steel Insights.

Abbasi, speaking on the sidelines of an international seminar organised by Steel Tech in Kolkata recently, said the MoS is in discussion with GAIL, which is looking to provide an additional 20-30 million cubic metres (mcm) of gas for which it does not have buyers. “GAIL thus wants to attract the steel companies,” Abbasi revealed.

Several of the existing gas plants in India had been shut for a long time because gas prices were at $16-17 per million metric standard cubic meter per day (MMSCMD). Now, with gas prices having fallen, these units are producing at 70 percent capacity. But, at the same time, coking coal prices went up to $300 per ton, which is making gas prices competitive.

Now GAIL has a surfeit of gas, Abbasi said and the PSU gas major has said it is willing to give a guarantee of 4-6 years whereby it will continue to provide gas at a certain price, which will be negotiated at $5-7 per MMSCMD, to the steel sector if the latter gives a take-or-pay commitment to GAIL.