RIL asks govt to name new customers fast for its KG-D6 gas

Reliance Industries has asked the government to immediately name new customers of its natural gas, saying it is being forced to produce less than capacity in the absence of mandated buyers.

RIL's eastern offshore KG-D6 fields can produce more than 60 million standard cubic meters per day but the firm is being forced to keep output below 40 mmscmd as the government has not yet released allocation to new customers.

"There being an immediate demand from the existing customers in various sectors to consume more than 80 mmscmd gas, we once again request you to make additional allocations which will enable us to increase the production of gas from KG-D6 to 80 mmscmd," RIL wrote to the Petroleum Ministry.

The government has allocated 15.1 mmscmd of KG-D6 gas to fertilizer units, 3 mmscmd to LPG plants, 18 mmscmd to power firms, 0.83 mmscmd to city gas projects and 3.75 mmscmd to steel plants. Of this firm allocations, customers like NTPC, Dabhol and Essar Power are yet to draw 6.95 mmscmd gas.

RIL said because of inability of these companies, 11 mmscmd gas was being sold to the identified power plants on fallback or temporary basis and demanded that this be converted to firm allocation.

"This will enable us to maintain a stable production of gas and will also benefit customers because the KG-D6 gas is the cheapest gas available in India today," it stated.

RIL said several captive power plants can consume 8-10 mmscmd of gas. "Since captive power plants have already been identified as one of the priority sectors, we request you to allow us to supply gas to these captive power plants."

"As informed earlier, KG-D6 currently has a capacity to produce more than 60 mmscmd today and this will increase to 80 mmscmd shortly," RIL President (Gas Business) R P Sharma wrote to the Petroleum Ministry on September 8.

The contracting priority released by the government for the power sector customers was valid till September 30, 2009. Also the firm quantity identified is only for 60 per cent of the plant capacity (70 per cent in some cases).

"In view of increased gas availability potential, we request that all the allocations be extended till the validity of the contract, ie 5 years, at 90 per cent plant capacity," it said.

Ratnagiri Gas and Power - the firm that runs the Dabhol power plant - has signed contract with RIL to buy 2.7 mmscmd of gas but is not taking the fuel as its current arrangement for sourcing LNG runs up to September end.

Essar Power is not taking its allocated 1.08 mmscmd due to issues of pipeline connectivity while 0.50 mmscmd is not being drawn by Gujarat.

Even gas utility GAIL India has signed for only 2.59 mmscmd of gas despite being allocated 3 mmscmd for its LPG plants. NTPC has not yet signed the pact for 2.67 mmscmd gas allocated to it.