GAIL India Ltd. (532155.BY) is considering a proposal to lay a gas transportation pipeline connecting West Myanmar with eastern China, its chairman said Tuesday.

"We are examining options, considering returns, investment and rights we may have on the pipeline," B.C. Tripathi told reporters on the sidelines of an annual shareholders meet.

The pipeline will transport gas from blocks A-1 and A-3 in Myanmar, in which GAIL owns a 10% stake.

South Korea's Daewoo International Corp. (047050.SE), Oil & Natural Gas Corp. (500312.BY), Korea Gas Corp. (036460.SE) and Myanmar Oil and Gas Enterprise are the other stakeholders in the blocks, which are expected to begin production in 2013.

The block partners have contracted to sell the gas to a unit of China National Petroleum Corp.

The 890-kilometer pipeline may cost about $1.5 billion, Tripathi said.

GAIL may form a joint venture with China Gas Holdings Ltd. (0384.HK) for the project due to the "high investment" involved, according to R.K. Goel, Director (Finance).

"We have approval from the government of Myanmar and the existing consortium to permit our alliance to associate in a new joint venture," he added.

GAIL owns a 7.67% stake in China Gas Holdings.

Going Slow On Petrochemical Projects

GAIL will go slow on its planned investment in overseas petrochemical projects due to weak demand amid the global economic downturn, Tripathi said.

The company was considering investments in overseas petrochemical projects with Reliance Industries Ltd. (500325.BY).

Petrochemical demand in India will continue to rise over next four to five years since per capita consumption is low, but overseas demand has slowed down, he added.

"We have lots of projects on hand...We will take action looking at the overall economic environment."

GAIL is expanding its pipeline infrastructure at a cost of INR300 billion and expects to nearly double its transmission capacity to 300 million metric standard cubic meters a day.

The investments in pipeline and petrochemical projects will help the company increase its revenue to INR500 billion in three to four years, depending on the economic environment, Tripathi said.

Its revenue was INR237.76 billion in the year ended March 31, 2009.

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