The HoA envisages supply of natural gas to the tune of 3.56 million metric standard cubic metre per day (MMSCMD) in the year 2006-07 to various SAIL plants. The requirement of different SAIL units in terms of MMSCMD is: Bhilai Steel Plant - 0.913, Durgapur Steel Plant - 1.156, Rourkela Steel Plant - 0.427 and Bokaro Steel Plant - 1.067.

SAIL had approached GAIL to explore the possibility of obtaining natural gas for bulk usage in its four integrated steel plants. With growing demand for coking coal world over, there has been a shortage of this vital input used for steel making. SAIL had faced major difficulties in availing coking coal during the first few months of the current financial year. This had prompted the steel major to opt for use of alternate fuels like coal dust injection (CDI), use of coal tar, etc.

Once the natural gas is available under the agreement, SAIL can further bring down the consumption of coking coal to the extent of around 1 million tonne per annum. Besides, the use of natural gas will strengthen the company''s effort to provide a cleaner environment while reducing its dependence on coking coal to some extent. The use of natural gas will also enhance the productivity of the furnaces and contribute to reduction in cost of operation.

The gas to these plants will be supplied through the proposed Jagdishpur-Haldia pipeline of GAIL. The pipeline is being laid as a part of the Gas Grid planned by GAIL to connect the sources of gas to demand centers throughout the country. Jagdishpur-Haldia pipeline is a significant limb of the Arterial Energy Flow Programme of GAIL for linking sources of gas to demand centers across the country.

The 30 inch diameter, 840 km long Jagdishpur-Haldia pipeline is estimated to cost approximately Rs. 2700 crores and will have a capacity of 12 MMSCMD which can be further enhanced to 15 and 21 MMSCMD. The Jagdishpur-Haldia pipeline shall pass through the states of Uttar Pradesh, Bihar, Jharkhand and West Bengal. The pipeline will provide a much needed impetus to the industrial growth in the energy deficient eastern part of the country. GAIL has already identified a demand potential of around 22 MMSCMD along Jagdishpur-Haldia pipeline.

The gas source for the supply through this pipeline will be R-LNG from Qatar and Iran and additional gas from Tapti. Additional R-LNG to the tune of 5 MMTPA (17.5 MMSCMD) is likely to be available at Dahej Terminal and 7.5 MMTPA of LNG is expected to be available from Iran. Further, additional gas from Tapti to the tune of 5.5 MMSCMD would also be available. Gas supply from Myanmar shall also supplement the requirement of customers along this pipeline.