New Delhi: Reliance Industries on Thursday started supplying gas from India’s most prolific field to its first customer, Nagarjuna Fertiliser Ltd, which has benefitted out of its proximity with the processing facility.
“RIL has started supplying gas. To begin with, it will supply 0.5 million metric standard cubic meter per day (mmscmd), which will be gradually increased. The agreement is for 1.549 mmscmd, which RIL has agreed to provide,” a senior Nagarjuna official said.
The two plants of Nagarjuna, with a capacity to produce six lakh tonnes of urea each year, are just 60 km away from RIL’s gas processing facility at Gagimoga near Kakinada. Before RIL started the gas supply, one plant was being run on gas supplied by GAIL while the other is run on Naphtha.
RIL’s eastern offshore KG-D6 field started producing gas on 1 April and the initial volumes were used for pressuring the pipeline and maintaining the minimum buffer in the line.
The Nagarjuna official said his company would cut down on the use of naphtha as and when RIL increases the gas supply. If the company gets more gas, an additional 2 lakh tonnes of urea can be produced in the two plants, he added.
RIL is currently producing five million cubic metres per day of gas from Dhirubhai-1 and 3, the first two of the 18 gas fields in KG-D6 block. Output is expected to be ramped up to 40 mmscmd by July and to peak 80 mmscmd by next year.
The company had last month signed gas sales and transportation contracts with 12 fertiliser companies.
“Fertiliser firms will pay RIL the rupee equivalent of $4.20 per million British thermal unit plus taxes and transportation,” a petroleum ministry official said.
“The exchange rate will be the average of rupee-dollar rate of the previous month. So, all the sales that will happen in April will be billed at the average of reference rate for March,” he said.
RIL is to supply a total of 15.35 mmscmd gas to 15 urea making plants of 12 fertiliser firms.
The delivery price, including taxes and transportation charges, of RIL gas in Andhra Pradesh would be $5.34 per mmbtu while in Maharashtra it would cost $5.87. In Gujarat, it would be $5.87 and along the HVJ pipeline $6.21.
KG-D6 gas will land at Kakinada in Andhra Pradesh, from where it will be transported to Bharuch in Gujarat through a 1,386-km pipeline laid by RGTL. In Gujarat, Reliance will use the pipeline network of Gujarat State Petronet Ltd to take the gas to end-consumers as well as connect to HVJ pipeline.