Shell signs £2bn gas deal with India

Shell has signed a deal to invest more than £2bn in a project to bring natural gas into Uttar Pradesh.

The natural gas is expected to cost about 20% less than naphtha, which is now used in much of India.

Shell, the world's largest private company dealing in liquefied natural gas, hopes to bring the gas to the northern Indian state through pipelines from India's west coast by 2004.

If the two countries can reach an agreement Shell will also pipe gas from Bangladesh, which is believed to have huge gas reserves.

Bangladesh has been reluctant to allow exports without knowing how much will be left for Bangladeshis in the future.

The Shell plan is to supply natural gas to the four fertiliser plants in the state, build a 2000 megawatt gas-fired thermal power plant, provide compressed natural gas facilities, supply gas to a proposed £1.2bn refinery project and convert all industrial units in the eastern part of the state to gas power.

Chief Minister Rajnath Singh, the state's highest elected official, said, "Converting of industrial units into gas, displacing liquid fuel consumption, will save £177mn annually in this part of the state alone."

Shell director Martin Foley said: "Our aim is to tap all the major players in the field so that we could have at least two pipelines in the state from the western and eastern coast, and that will completely change the picture of the state in a very short time."