RIL, IGL to sign gas supply pact; gas priced at $4.2 per mBtu

RIL, IGL to sign gas supply pact; gas priced at $4.2 per mBtu

New Delhi: Reliance Industries Ltd (RIL) is likely to sign on a gas sale contract with Indraprastha Gas Ltd (IGL) that would use the supplies from RIL’s eastern offshore gas fields for vending CNG to automobiles and piped gas to kitchens in the national capital.

RIL is likely to sign the Gas Sales and Purchase Agreement (GSPA) with IGL — the sole supplier of CNG and piped gas in Delhi — for supply of 0.308 million standard cubic meters per day of its KG-D6 gas, industry sources said.

Government has allocated over 0.83 mmscmd gas from KG-D6 for seven city gas projects at a price of $4.2 per million British thermal unit.

Besides IGL, Mahanagar Gas Ltd that 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 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 fertilizer and power producers in accordance with the Gas Utilization Policy.

Sources said RIL’s gas output from KG-D6 had touched 37 mmscmd on one day last week when Torrent Power in Gujarat drew its entire quota of gas. But since then it is hovering at around 36 mmscmd.

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.

Among the customers so far identified by the government, Ratnagiri Gas and Power Pvt Ltd (RGPPL), the firm that operates the Dabhol plant, and state-run NTPC are yet to draw even a single unit from RIL’s Krishna-Godavari (K-G) basin D6 fields.

RGPPL has signed for 2.7 mmscmd but is not taking any gas as it has a contract to buy gas from Petronet LNG Ltd till September-end. NTPC, which was allocated 2.67 mmscmd, has not signed the contract with RIL so far.

Fertiliser firms, which had been given the first right over KG-D6 gas, since last week are drawing 14.5 mmscmd, the highest ever after urea-making plants that were shut for maintenance became operational. Fifteen fertiliser firms have been allocated 14.96 mmscmd gas.

Power firms are drawing 18 mmscmd, while steel makers like Essar are drawing between 3 and 3.5 mmscmd, an official said.

Sources said RIL gas sales will cross 40 mmscmd the day the country’s largest gas-fired power plant, RGPPL, starts drawing gas.