Govt prescribed price for RIL gas lower than others

New Delhi, Aug 6 (PTI) Stressing that the priced fixed
for gas produced by Reliance Industries was lower than rates
charged by other private firms, the Indian government Thursday
said its gas utilisation policy was aimed at operationalising
idle and unutilised assets.

Replying to a calling-attention motion in Rajya Sabha
(Upper House of indian Parliament), Oil Minister Murli Deora
said the USD 4.2 per million British thermal unit price fixed
for gas produced from KG-D6 fields of Reliance Industries
Limited (RIL) was lower than the average of USD 5.51 per mmBtu
charged by UK's BG-led consortium for Panna/Mukta and Tapti
gas.

It was also lower than the USD 4.3 per mmBtu price of gas
produced from Cairn's Ravva Satellite fields and USD 4.75 per
mmBtu for the UK firm's Lakshmi fields.

Deora, replying to the motion moved by Tapan Kumar Sen on
availability of gas for power generation, said that an
empowered Group of Ministers had fixed the price formula as
well as usage of gas.

"The intention of the Government being to operationalise
all gas based assets which were lying idle/unutilised due to
non-availability of gas," he said.

The eGoM-approved price formula provides for a maximum
gas price of USD 4.2 per mmBtu at USD 60 a barrel crude rate.
If crude falls to USD 25, RIL gas will cost USD 2.5 per mmBtu.

"I am confident that natural gas would fuel economic
growth of the country and the government will do all in its
power to ensure its use for natural priorities at reasonable
price," he said.

Stating that demand has far outstripped the availability,
Deora said the domestic gas availability in 2008-09 at 105
million standard cubic meters per day met just over half of
the 197 mmscmd requirement.

"With the commencement of gas production from (RIL's)
KG-D6 fields and increased import potential of liquefied
natural gas (LNG), the gap between demand and supply has come
down," he said.

RIL, which started gas production on April 2, is
currently producing 35 mmscmd, he said adding the eGoM had
allocated the first 40 mmscmd of gas from KG-D6 to fertilizer
(15 mmscmd), power (18 mmscmd), city gas (5 mmscmd) and LPG
plants (3 mmscmd).

"eGoM further decided that any shortfall in utilisation
should be allocated to gas-based steel plants and to existing
power plants, including captive power plants," he said.

RIL is selling gas to consumers on the basis of priority
drawn by the eGoM approved Gas Utilisation Policy.

Deora said with the commencement of KG-D6 production,
over 100 mmscmd gas was being supplied to power and fertilizer
sector out of a total supply of 40 mmscmd.

"As a result of KG-D6 supplies, about 4,000 megawatt (MW)
of additional power is being generated and an annual saving in
subsidy on fertilizer of Rs 3,000 crore will be achieved," he
said.

The RIL gas formula approved by eGoM is for five years.
"The price of gas being made available to the priority sectors
is substantially lower than the prevailing prices of alternate
liquid fuels like naphtha," Deora said.

To make available the natural gas in all regions of the
country, the government has authorised several entities for
laying gas pipelines to transport natural gas from the
production centres to the potential consumers.

"The government proposes to develop a blue print for long
distance gas highways leading to a National Gas Grid," he
said. "This would facilitate transportation of gas across
length and breadth of the country."

Deora said a study to consider the feasibility of having
a uniform cost price regime for pipelines was being undertaken
and the report was expected within 3 months. PTI