New Delhi: Upping its ante against the oil ministry, Reliance Industries has refused to give natural gas to new customers by cutting supplies to power and fertiliser plants saying the ministry’s order was in violation of the gas utilisation policy and wants panel of ministers to discuss it.
The Oil Ministry had on 12 July written to RIL asking it to make a “pro-rata” cut in gas supplies to all existing customers if the production from its eastern offshore KG-D6 fields cannot support new customers like Essar Oil’s Vadinar refinery.
RIL on 15 July wrote to Petroleum Minister Murli Deora saying it had not signed contracts to supply KG-D6 gas with customers like Essar, as they were not ready to receive gas when available and so allocation made to them has lapsed.
The Gas Utilisation Policy, as framed by an Empowered Group of Ministers, provides for no reservation of gas and users, who said will be able to take gas before end of 2009-10 fiscal, were allocated gas. However, not all those who were allocated gas were in a position to take gas by the appointed date.
“...all allocations that have not been signed on account of the customers not being ready to receive gas when available or lacking in the necessary pipeline connectivity cannot claim to have any quantity reserved for them,” it wrote in the letter, a copy of which was also marked to finance minister Pranab Mukherjee.
RIL’s KG-D6 fields can sustain a production of only 60 million standard cubic meters per day and the company has already signed or committed to sign Gas Sales and Purchase Agreements (GSPAs) for 57.8 mmscmd.
Against the availability of 60 mmscmd gas, the Oil Ministry has allocated about 64 mmscmd and wants RIL to sign GSPAs with all those who have been allocated gas.
“On the day that KG-D6 production is not sufficient to cater to all the consumers with firm allocation, pro-rata cuts should be imposed on all firm consumers,” the ministry wrote to RIL on 12 July.
Users awaiting signing of GSPAs include state-run NTPC (1.14 mmcmd), Essar Oil’s Vadinary refinery in Gujarat (0.6 mmcmd), Oil and Natural Gas Corp’s LPG units (0.406 mmcmd), Rithala power plant in Delhi (0.4 mmcmd) and Bawana power plant (0.93 mmscmd).
RIL says it can sign contracts to supply another 2.2 mmscmd on firm basis as it does not want to sign pacts for commodity it does not have.