The Hindu Business Line : Reliance may finalise gas supply pacts by June

Refiner's plans
Gas to cost around $4.5 per Million British Thermal Units
To supply both bulk and domestic users through pipelines
Will double total national gas availability

Mumbai April 7 Reliance Industries Ltd has said that it is in parleys with a host of bulk users of natural gas, including some gas-starved independent power producers (IPPs) and expects to finalise agreements with them within three months.

The President and Chief Executive Officer of Petroleum, Mr P.M.S. Prasad, said that there is significant demand-supply gap for gas in the country. As against a total demand of about 180-200 million standard cubic meters per day (mscmd), the supply is about 85 mscmd.

"Once we produce about 80 mscmd of gas, beginning June 2008, the company would be able to supply both bulk users and domestic users through pipelines. In fact, this would effectively double the total national domestic gas availability," he said.

Mr Prasad said: "the gas supplied by Reliance would be competitively priced and we are looking at about $4.5 per million british thermal units."

"We are negotiating with potential buyers and expect to conclude agreements by about June. These agreements have to be approved by the Government of India. However, we expect the prices to be market driven,'' he said.

Cost reduction

The Reliance official said that the gas supplied to domestic users through pipelines would help bring down the total cost for them.

Asked about pressure by some States, particularly Andhra Pradesh, to bring down the gas price, Mr Prasad said that it would not be possible to offer gas at the price of what is supplied through the administered price mechanism. Citing the case of some States that are entering into gas supply agreements at a much higher price than what Reliance is now planning to offer, Mr Prasad said that the only way out is to arrive at a mutually agreeable pricing mechanism that is market driven.

Asked if they expect to sign up with some of the gas-starved IPPs in the State, he said: "we are open to supply gas to IPPs and willing to meet all the requirements of some of the potential bulk users in states like Andhra Pradesh."

About 1,000 MW fuelled by gas is now in operation in Andhra Pradesh and about 1,200 MW of capacity is lying idle due to shortage of gas. There is hope and anticipation about the KG gas find. And once the gas flows through these wells in mid 2008, the State would be one of the key beneficiaries.

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