RIL stops gas supply to non-priority sector

Reliance Industries (RIL) today cut natural gas supplies to non-core users like refineries and steel plants following orders from the Ministry of Petroleum and Natural Gas.

With gas production from RIL’s block in the Krishna Godavari (KG) basin seeing a decline to 50 million standard cubic metres a day (mscmd) from 62 mscmd in March 2010, the government has asked RIL to give priority to users in fertiliser, LPG, power and city gas distribution sectors. This meant cutting supply to users in the steel, petrochemical and refining sectors.

From 6 am, Reliance implemented the MoPNG’s priority allocation order. It would first supply natural gas to urea-making units and power plants. If there were any volumes left, it will supply to refineries, petrochemical units and sponge iron plants.

A Reliance spokesperson declined to comment.

Three companies – Welspun Maxsteel, Ispat Industries and Essar Steel – had moved courts for a stay on the ministry’s decision.

Essar has filed a case before the Delhi High Court and the court will take up the matter on Tuesday. The case filed by Welspun Maxsteel and Ispat Industries before the Bombay High Court has been adjourned to May 23. MoPNG, on its behalf will hear the parties on Wednesday.

Essar has been allocated 3.2 mscmd, while Welspun Maxsteel and Ispat Industries have together been allotted one mscmd on a firm basis. A firm allocation, compared to fallback, is considered more definite as the user company has a right on the gas produced.

RIL’s petrochemical plant and refineries at Jamnagar get 1.17 mmscmd and 4.21 mmscmd, respectively.