KG D6 Block gas allocation: Implications and Benefits

The petroleum ministry has drawn up a matrix of sector-wise allocation of gas from RIL`s D-6 block along with the implications of such allocations, as well the benefits accruing to these sectors. The following are the details:

Fertiliser:

--Allocation: An allocation, equal to the requirement of 15.508 MMSCMD of gas, was made.

--Implications: The allocation was meant to meet the entire demand of the fertilizers sector, thus reducing fertiliser imports. Earlier, costlier liquid fuels and imported gas were being used for production. To note, fertilisers are sold at administered prices and the difference in selling price and the cost of production is borne by the government as subsidy, thus narrowing the gap would ease the pressure on the exchequer.

--Benefits: With this allocation, about 76 lakh tones of urea per annum will be produced. Also, government expenditure will be curtailed by about Rs.4,000 crore per annum.

Power:

--Allocation: An allocation of 43.165 MMSCMD was made.

--Implications: This allocation is expected not only to meet the entire demand of power sector, but also bring in efficiency to power plants that have been working sub-optimally so far; in particular, the four independent power projects (IPPs) in Andhra Pradesh (Konaseema, GVK, Gautami and GMR) which were ready since 2005, but were non-operational due to shortage of gas.

--Benefits: About 10,000 MW of power will be generated and a cost-reduction of about Rs.11,000 crore per annum is expected in the power sector.

LPG:

--Allocation: An allocation of 3 MMSCMD has been made.

--Implications: With this allocation, the entire demand in the LPG sector is expected to be met.

--Benefits: LPG production is expected to be pushed up by one crore LPG cylinders per annum, after KG basin gas is swapped with rich gas for LPG production

City Gas Distribution (CGD):

--Allocation: An allocation equal to the requirement of 2.83 MMSCMD has been made.

--Implications: This gas allocation is to meet the entire demand of the domestic and transport (CNG) sector.

--Benefits: A reduction in the cost of fuel used for domestic and transportation purposes is expected with this allocation. Benefits are expected to accrue to 30 lakh households and three lakh vehicles per day. Also, the reduction in cost to the consumers is estimated to be in excess of Rs.1,500 crore per annum.

Steel:

--Allocation: An allocation of 4.19 MMSCMD has been made.

--Implications: This quantity is expected to meet the entire demand of the gas-based steel sector. To note, these gas-based plants can not use any alternative fuel other than gas.

--Benefits: This allocation will lead to a saving of over Rs.1,000 crore per annum to the steel sector.

Petrochemicals:

--Allocation: An allocation of 1.918 MMSCMD was made, against a requirement of 14 MMSCMD, has been made.

--Implications: The allocated gas will be swapped with semi-rich gas which will be used as a feedstock in the petrochemical sector.

--Benefits: This swapping of allocated gas to semi-rich gas will result in the production of value added products (VAPs) like ethylene and propylene.

Refineries:

--Allocation: An allocation of 11 MMSCMD, against a requirement of 24.13 MMSCMD, has been made.

--Implications: This allocation will meet only 46% of the current demand of the refining sector.

--Benefits: This will lead to the replacement and conversion of the liquid fuels to value added products like HSD and gasoline. The estimated benefit to the refining sector is about Rs.3,000 crore per annum.

Captive Power:

--Allocation: An allocation of 10 MMSCMD has been made.

--Implications: Demand of captive power plants to be met only after the non-captive demand of public utilities and IPPs are met.

--Benefits: Generation of over 2,000 MW of power and a cost reduction of about Rs.2,500 crore per annum is estimated with the allocation.

Source: Energy Line India

 

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