Gail (India) spurted for the second straight today after reports suggested that the gas distributor has struck oil and gas onshore Gujarat.

The upbeat news saw the scrip stride up 3.6% to Rs 117.50 barely as trading commenced. Around 5.8 lakh Gail (India) shares were traded on BSE thus far. The stock gained 2.7% to Rs 13.35 on Wednesday, albeit in volatile trade, on high volumes on reports of the new gas discovery.

A surge in volumes has characterised the counter in the recent few sessions. Daily volumes crossed 30 lakh shares on BSE in the last two sessions. The stock's valuation has also seen a simultaneous jump - up 54.9% from Rs 75.85 on 28 April 2003.

"There's a lot of interest being generated in the stock," an equity dealer with a local brokerage says. On Tuesday alone, FIIs were believed to have accumulated 30 lakh Gail shares, according to dealers.

On Wednesday, Gail announced that it had struck oil and gas in the western state of Gujarat. Gail, however, said it would be in a position to give details about the size of the oil and gas find, owned jointly with state-run Gujarat State Petroleum Corp (GSPC), in the next three-to-four weeks.

Gail also announced plans to set up a 450-kilometre gas transportation pipeline in western India and said that it would begin drilling operations at a jointly-owned gas field off Myanmar's northwestern coast shortly. The gas and oil find has now created backward synergies for Gail.

Gail is the largest gas transmission and marketing company in India. It owns and operates over 4,000 kms of pipeline and has about a 95% market share in the natural gas business in India.

Gail buys natural gas from Oil and Natural Gas Corporation (ONGC) and distributes it to industrial and commercial users, besides operating a few liquid petroleum gas plants. It also manages the Hazira-Bijapur-Jagdishpur pipeline, in which the residual gas is cracked to make petrochemicals at Auraiya in Uttar Pradesh.

Gail has lined up mega investment plans with an outlay of Rs 20,000 crore in expanding operations over the next five years.

There had been reports recently that British Gas India, part of the British Gas Group of the UK, has approached Gail to further the alliance between the two beyond Mahanagar Gas, their distribution business in Mumbai.

The two have been exploring the possibility in which the British company may offer a strategic stake of 15-25% in Gujarat Gas to Gail. The two companies also want to extend the Mahanagar Gas distribution system in Mumbai to Pune, where Gail has distribution rights.