Govt asks RIL to supply Natural Gas to Dabhol project

Government has asked Reliance Industries to supply natural gas from its eastern offshore KG-D6 fields to the beleaguered Dabhol power plant in Maharashtra as imported LNG was proving costlier for the nation's biggest gas-fired plant.

An Empowered Group of Ministers (EGoM) on pricing and utilisation of natural gas, headed by External Affairs Minister Pranab Mukherjee, at a meeting last month decided that Ratnagiri Gas and Power (RGGPL), the owner of Dabhol power plant, will get 1.4 million standard cubic meters per day (mmscmd) of gas from KG-D6 from January, official sources said.

This quantity will rise to 2.7 mmscmd from April and the plants full requirement of 8.5 mmscmd would be met from September 2009.

Reliance is to begin production from its prolific KG-D6 fields lying off the Andhra coast in January 2009 with an initial output of 5 mmscmd. This will rise to 25 mmscmd by March and to 55 mmscmd by July 2009.

When contacted, Petroleum Secretary R S Pandey confirmed the EGoM decision saying supplies to RGGPL would be within the overall quantities allocated to power sector.

While fertiliser sector would continue to get top priority in getting KG-D6 gas, RGPPL is only being given a time-advantage. "Fertiliser will have the first right and its requirement of 14 mmscmd will be entirely met (from KG-D6)," he said.

At present, Dabhol gets about 5.4 mmscmd of imported gas for two of its three units at $4.98 per million British thermal unit (mmBtu).

Petronet LNG imports 1.5 million tonnes a year of LNG from RasGas of Qatar at $8.5 per mmBtu but since this price is too high, the rates are averaged with cheaper long-term LNG imports to arrive at $4.98 per mmBtu.