RIL to get access to its own gas for captive use | business | Hindustan Times
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RIL to get access to its own gas for captive use

business Updated: Nov 16, 2009 22:19 IST

Mukesh Ambani managed Reliance Industries Ltd (RIL), which operates India’s biggest gas field, will finally be able to use its own gas being produced in the Krishna Godavari (KG) basin and sold at $4.2 (Rs 193) per unit.

RIL is already producing 50 million metric standard cubic meters per day (mmscmd) of gas from its KG-D6 field and has informed the government that it is ready to produce 65 mmscmd after firm allocations are decided to various consuming sectors.

Thus far, RIL was not allotted any gas and was paying $6-7 (Rs 676-322) per unit against $4.2 per unit being charged by it from consumers using RIL’s KG-D6 gas. The company has been buying about 10 mmscmd of regassified-LNG from Petronet LNG Ltd and Royal Dutch/Shell — the two LNG importers, for use in its refineries and petrochemical plants.

Following the allocation of gas by the Empowered Group of Ministers (EGoM) on gas at a meeting on October 27, Reliance will be able to use 1.9 mmscmd of gas for petrochemicals and around 4 to 5 mmscmd for refineries.

A government release said that 1.918 mmscmd KG D-6 gas should be supplied on firm basis to petrochemicals plants to meet their feedstock requirement, i.e., 1.168 mmscmd to Reliance’s Gandhar project in Gujarat and 0.75 mmscmd to Reliance’s Nagothane project in Maharashtra

“The minutes of EGoM have been approved and accordingly a letter is being sent to Reliance asking it to enter into gas sales and purchase agreements (GSPAs) with the customers identified by the EGoM,” a government official said.

While the exact gas allocation for captive power plants, power ministry officials said out of the total 10 mmscmd allotment for captive power plants, RIL should be able to get around 5 mmscmd of gas.

An source close to RIL said, “The gas allocations for captive power projects is yet to be decided. We are not sure if the 5 mmscmd for RIL’s captive power projects is a correct figure and is going to be much less. Even gas for refineries usage will be less than 4 mmscmd.”