IGL gets first supplies of RIL gas from KG-D6

Reliance Industries' Bay of Bengal gas has reached the national capital with CNG retailer Indraprastha Gas Ltd receiving the first supplies from KG-D6 fields this morning.     

"We have begun drawing KG-D6 gas from this morning. We received about 0.2 million standard cubic meters per day of gas today which would be ramped up in coming days," an IGL official said.     

IGL had earlier this month signed a Gas Sales and Purchase Agreement (GSPA) to buy 0.308 mmscmd of gas from RIL.     

"With this, we have stopped taking regassified-LNG," the official said, adding RIL gas was cheaper than imported LNG.     

The KG-D6 gas would meet the increased demand for compressed natural gas (CNG) by automobiles and piped natural gas by households and industries.

"The delivered cost of KG-D6 gas will be about Rs 12 per cubic metre as against Rs 13.40 per cubic metre of LNG," he said.     

He said the volume will increase to 0.5 mmscmd by March 2010 and in five years the KG gas requirement would be 2.1 mmscmd.     

The delivered price of RIL gas, after including taxes and transportation charges including those paid to GAIL, will be $6.7-6.8 per million British thermal unit as against the liquefied natural gas (LNG) price of $7.25 per mmBtu.

IGL is the first city gas company to sign the GSPA with RIL.     

Besides IGL, Mahanagar Gas Ltd, which retails CNG in Mumbai, has been allocated 0.37 mmscmd and Hindustan Petroleum 0.49 mmscmd for its CNG operations in Ahmedabad, sources said.     

State gas utility GAIL's subsidiaries Avantika Gas Ltd has been given 0.012 mmscmd for Indore and 0.0012 mmscmd for Ujjain, Green Gas Ltd 0.15 mmscmd and Sabarmati Gas Ltd 0.077 mmscmd.     

RIL is currently producing 36-37 mmscmd gas from KG-D6, half of which goes to power plants. The firm has the capacity to produce 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.     

RIL cannot sell gas to these and other users, including its own refineries, which are starved of the fuel, unless allocation is approved by the government.