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| GAIL signs pact for buying gas from RIL's KG-D6 |
| Press Trust of India / New Delhi Aug 30, 2009, 17:34 IST |
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State-run GAIL India has signed a contract to buy natural gas from Reliance Industries (RIL) for production of LPG.
GAIL signed a Gas Sales and Purchase Agreement (GSPA) on August 28 for buying 2.6 million standard cubic meter per day (mmscmd) of gas from RIL's KG-D6 fields at government approved price of $4.2 per million British thermal unit (mBtu).
"We have signed the GSPA and gas supplies are likely to begin from September 3," a GAIL official said.
The state-run firm will use the gas sourced from KG-D6 at six LPG production plants.
The government had placed LPG plants at priority number three after fertiliser and power plants, for receipt of KG-D6 gas. Other sectors identified included city gas and steel.
RIL has so far contracted gas supplies to 15 fertiliser firms, 19 power plants and three steel makers.
It is currently producing around 37 mmscmd gas from KG-D6, half of which goes to power plants.
The firm has the capacity to produce a little less than 60 mmscmd but is constrained to produce less as the government is yet to identify customers for buying gas beyond the initial 40 mmscmd, allocated primarily to fertiliser and power producers in accordance with the Gas Utilisation Policy.
Among the customers identified so far by the government, Ratnagiri Gas and Power Pvt Ltd (RGPPL), the firm that operates the Dabhol plant, state-run NTPC and Essar Power are yet to draw even a single unit from RIL's KG basin D6 fields.
Industry sources said the GSPA with NTPC for supply of 2.67 mmscmd of gas may also be signed soon. All outstanding issues have been settled.
Fertiliser firms, which had been given the first right over KG-D6 gas, are drawing 14.5 mmscmd, the highest ever after urea-making plants that were shut for maintenance became operational. Fifteen fertiliser firms have been allocated 14.96 mmscmd gas.
Power firms are drawing 18 mmscmd, while steel makers like Essar are drawing between 3.5 and 4 mmscmd.
The company can not sell gas to any of the users, including its own refineries, which are starved of the fuel, unless allocation is approved by the government.
RGPPL has signed for 2.7 mmscmd but is not taking any gas as it has a contract to buy gas from Petronet LNG Ltd till September-end. NTPC, which was allocated 2.67 mmscmd, has not signed the contract with RIL so far.
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