GAIL to buy gas from K-G basin

Written by Press Trust of India | New Delhi | Updated: Aug 31 2009, 07:00am hrs
GAIL has signed a contract to buy natural gas from Reliance Industries (RIL) for the production of LPG.

GAIL signed a gas sales & purchase agreement (GSPA) on Friday for buying 2.6 million standard cubic metre per day of gas from RILs KG-D6 fields at government approved price of $4.2 per million British thermal unit.

We have signed the GSPA and gas supplies are likely to begin from September 3, a Gail official said.The firm will use the gas sourced from KG-D6 at six LPG production plants.

The government had placed LPG plants at priority number three after fertiliser and power plants, for receipt of KG-D6 gas. Other sectors identified included city gas and steel. RIL has so far contracted gas supplies to 15 fertiliser firms, 19 power plants and three steel makers. It is currently producing around 37 mmscmd gas from KG-D6, half of which goes to power plants.

The firm has the capacity to produce a little less than 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 fertiliser and power producers in accordance with the gas utilisation policy.

Among the customers identified so far, Ratnagiri Gas & Power, NTPC and Essar Power are yet to draw even a single unit from RILs KG basin D6 fields.