The Government has asked Reliance Industries Ltd to sell natural gas from its eastern offshore KG-D6 fields to steel firms like Essar and Ispat to help the country's most prolific gas field to produce at an optimum level.
The Ministry of Petroleum and Natural Gas yesterday issued orders directing Reliance to sell 3.75 million standard cubic metres of gas per day to Essar Steel, Ispat Steel and Vikram Ispat, a top official said.
"We had identified sectors that would consume the initial 40 mmcmd output from KG-D6. But some of them like CNG supply projects in cities are unable to take their entire allocation and that is now being reallocated to steel firms," he said.
Essar will get 2.86 mmcmd, Ispat 0.53 mmcmd and Vikram Ispat the remaining 0.36 mmcmd.
Reliance is currently restricting output from KG-D6 to just 28 mmcmd as not all of the power and fertiliser customers identified by the Government are taking their full quota of allocation.
The official said after power and fertiliser, 5 mmcmd gas from KG-D6 was allocated for city gas projects but only 1.1 mmcmd can immediately be taken. The rest is now being distributed among steel firms.
The allocation will boost the profitability of steel firms, which had been buying expensive LNG or naphtha to meet feedstock shortage at their plants.