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Reliance to sell gas to Anil's Dadri plant

RIL will supply 28 million standard cubic metres of gas per day to Reliance Natural Resources Ltd for $2.34 per million British thermal unit.

india Updated: Apr 30, 2006 13:48 IST

Reliance Industries Ltd will sell gas from its Bay of Bengal fields to Anil Ambani's ambitious 5600 MW Dadri power project in Uttar Pradesh for $2.34 per million British thermal unit (mBt), a good $2.4 lower than current market price.

RIL will supply 28 million standard cubic metres of gas per day to Reliance Natural Resources Ltd, the Anil Dhirubhai Ambani Enterprises firm to sourcing gas for Dadri project.

Sources said RIL on April 14 wrote to the Oil Ministry seeking its approval for delivering gas from its KG-DWN-98/3 Block for $2.34 per mBtu. Added to this, would be $0.12 per mBtu marketing cost and another $0.72 per mBtu cost of transporting it from Kakinada to Dadri.

After adding central sales tax, the burner-tip price of gas came to $3.27 per mBtu on net heating value (NHV) basis.

The delivery price would have an annual escalation equivalent to average of US inflation over the base month (September 2003), sources said.

"The contract price is the same as the price bid by RIL in an international competitive bidding process for supply of gas to National Thermal Power Corp (NTPC) for the proposed expansion of its Kawas and Gandhar power plants," the company said in the letter to the Petroleum Ministry.

Reliance has offered NTPC gas at $2.70 per mBtu plus $0.48 per mBtu for piping the gas from Kakinada Gujarat, a distance of 1400-km. After adding a four per cent

Central sales tax, the gas price came to $3.27 per mBtu on net heating value basis. On gross heating value basis, it was $2.97 per mBtu.

Reliance Industries plans to produce 40 million standard cubic meters per day (mmscmd) of gas from Dhirubhai-1 and Dhirubhai-3 discoveries in KG-DWN-98/3 (or KG-D6) block off the Andhra coast from mid-2008.

"RIL and Reliance Natural Resources Ltd (RNRL) signed a Gas Supply Master Agreement on January 12, 2006, under which RNRL (or an affiliate) can purchase up to 28 mmscmd of gas for power generation, under one or more gas sales and purchase agreements (GSPAs)," Reliance wrote to the ministry.

"Under the relevant provisions of the Production Sharing Contract (for KG-D6), we request your approval of the price formla for the commodity price (delivery price) as the price of gas to be used for cost recovery, profit sharing and all other purposes under the PSC for the sale of all the natural gas produced from the block under a GSPA," it added.

First Published: Apr 30, 2006 12:11 IST