Govt to review Reliance's gas allocation from KG basin

The Government intends to review the allocation of Reliance's gas produced from the Krishna Godavari (KG) Basin D6 field. It could re-fix allocation as per the amounts drawn so far by the customers.

Ministry officials told Business Line that the Petroleum Secretary, Mr S. Sundareshan, had conducted a review meeting recently on off-take of KG gas by the allottees.

He is understood to have asked them to come back in a fortnight's time with details on their off-take, and how much they can actually absorb.

A final view will be taken in mid-April, based on which a decision will be taken on the unused quantity. If necessary, a decision on re-allocation could be also considered, officials said.

Asked if there were any penal provisions in the Gas Sales and Purchase Agreement (GSPA) that Reliance has entered into with these customers for non-drawal of gas, sources said “no penal provisions have been provided for non-drawal of gas by the consumers during initial six months of the supply.”

RIL is currently producing 60-62 mscmd of gas, which has been allocated to identified customers from the priority sectors — power, fertiliser, steel, city gas distribution, gas-based LPG plants, petrochemicals sector, and refineries — based on a decision of an empowered group of ministers.

Reliance, which had planned to ramp up its production to 80 mscmd by March, claims that for want of customers and choked pipeline network, it has not been not able to do so.

2 categories of customers

There are two categories of customers — one comprising those who are drawing less than what they have been allocated, and two, those who were supposed to start drawing gas by March 2010 but are not ready to draw (mainly power units yet to be commissioned).

The need to review the allocation of gas has arisen due to these two reasons, sources said, adding that “this was restricting the allocation to those who needed gas. It needs to be considered whether volumes to such customers can be reduced and allocated to those who are already drawing gas and require more.”

At present, RIL is supplying almost 30 mscmd of gas to the power sector, 12.86 mscmd to fertiliser, 7.63 mscmd to refineries (including RIL's own refinery), 4.65 mscmd to steel, 0.64 mscmd to city gas distribution sector, 1.17 mscmd to petrochemicals (RIL's Hazira plant), 2.59 mscmd to gas-based LPG units.

Source: Hindu Business Line

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