The Hindu Business Line : Govt asks Reliance to supply KG gas first to urea plants

The EGoM also decided that a maximum quantity of 5 mmscmd would be made available to city gas distribution projects for supply of piped natural gas to households and compressed natural gas in transport sector.

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New Delhi, June 25

Reliance Industries Ltd (RIL) has been asked by the Government to supply natural gas from its prolific Krishna Godavari field in the following order of priority – the urea plants, LPG plants and existing power plants – once it commences production.

According to an official statement, the Empowered Group of Ministers (EGoM) examining the issues relating to pricing and commercial utilisation of gas under New Exploration Licensing Policy (NELP) has decided that all gas produced from areas awarded in the licensing rounds would have to sell gas in accordance with the marketing priorities determined by the Government.

The production of natural gas from RIL’s KG D6 field is expected to commence from September 2008 and will initially be about 25 mmscmd. It is further expected that the production would gradually increase to 40 mmscmd by March 2009. Existing gas based urea plants, which are now getting gas below their full requirement, would be supplied gas so as to enable full capacity utilisation, the statement said.

A maximum quantity of 3 mmscmd would be supplied to existing gas based LPG plants and up to 18 mmscmd natural gas, being the partial requirement of gas-based power plants lying idle/under-utilised and likely to be commissioned during 2008-09, and liquid fuel plants, which are now running on liquid fuel and could switch over to natural gas, would be supplied to power plants.

The EGoM also decided that a maximum quantity of 5 mmscmd would be made available to city gas distribution projects for supply of piped natural gas (PNG) to households and compressed natural gas (CNG) in transport sector.

Any additional gas available beyond the specified categories would be supplied to existing gas-based power plants, as their requirement is more than 18 mmscmd, the statement said.

Priority sectors

“Consumers belonging to any of the priority sectors should be in a position to actually consume gas as and when it becomes available. So the marketing priority does not entail any reservation of gas. It implies that in case consumers in a particular sector, which is higher in priority, are not in a position to take gas when it becomes available, it would go to the sector which is next in order of priority,” the statement said.

In case of default by a consumer under a particular priority sector and further in the event of alternative consumers not being available in the same sector, the gas will be offered by the contractor to other consumers in the next order of priority. The priority for supplying gas from a particular source would be applicable only among those customers who are connected to existing and available pipeline network connected to the source, the statement said.

“So, if there is a marginal or small field that is not connected to a big pipeline network, then the company would be allowed to sell the gas to customers who are connected or can be connected to the field in a relatively short period (of say three to six months),” it stated.

The priority would not impact the process of price discovery whenever it is undertaken, as all the customers would participate in the price discovery process as already decided by the EGoM and would be eligible for utilising natural gas subject to priority.

Since the supply situation is expected to increase substantially in the near future in view of increased availability from domestic sources and imported gas (LNG/ transnational pipelines), these guidelines would be applicable for the next five years after which they would be reviewed, the statement said.

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