ONGC, GAIL in gas sale and purchase agreement

Public sector GAIL India Ltd and Oil and Natural Gas Corporation Ltd (ONGC) have signed a `gas cooperation agreement' for sale and purchase of natural gas, under which gas marketing and distribution company GAIL will buy all gas produced at ONGC's existing and new fields, to enhance the availability of natural gas in the country.

The agreement is initially valid for a three-year period, during which GAIL will undertake supply of all natural gas produced by ONGC to various customers through its pipeline infrastructure.

GAIL will hold exclusive marketing rights for all gas produced by ONGC during the period. This can be extended on mutual consent, the company said in a statement.

The two companies also signed a swap agreement for supply/sale of LNG by GAIL to ONGC for shrinkage of C2+ (ethane) extraction at Dahej from existing GSPA quantities from Petronet LNG Ltd and purchase of equivalent natural gas produced by ONGC from domestic sources, subject to allocation by the ministry of petroleum and natural gas.

The agreement also paves way for ONGC commissioning C2+ extraction plant and subsequent supply of C2+ components to ONGC Petro-additions Ltd (OPaL), which is being set up as a subsidiary of ONGC, at the Dahej SEZ, for manufacturing petrochemicals.

GAIL will hold the exclusive marketing right of all gas produced by ONGC for a three-year period, which can be extended on mutual consent, the company said in a statement.