GAIL to market ONGC gas under new pact

State-owned companies GAIL (India) Ltd and Oil & Natural Gas Corp Ltd on Monday entered into an exclusive agreement under which GAIL would market the entire natural gas produced by ONGC for the next three years.

This was part of what the two public sector giants called a landmark agreement to ensure mutual business growth in the areas of natural gas as well as petrochemicals.

The two PSU giants signed a number of agreements and exchanged documents in this regard in the presence of the ONGC chairman and managing director R S Sharma and GAIL chairman and managing director B C Tripathi.

Under the gas agreement, GAIL will have the first right to market the gas that ONGC produces from any of its fields. However, if GAIL is unable to get a ''good'' price within 30 days, ONGC will take back the marketing right. The agreement will be initially valid for three years and can be extended, the companies said in separate statements.

This would increase the availability of firm gas sourcing for infrastructure projects. The two companies also reached an understanding in swapping gas available to both the companies so as to optimise logistics and costs.

The joint initiative will enable ONGC to effectively monetise gas produced from its future fields, with GAIL providing infrastructure and marketing tie-up for supply to potential customers, the statements said.