Reliance Industries Ltd has asked the petroleum ministry to dally no more on allocation of output beyond the current ceiling for its D6 field in the Krishna Godavari basin. And the ministry says it is working on the matter.
RIL's KG basin started pumping gas in April and is currently producing 37-38 mscmd. It could produce more even now, but who is to get the extra gas is yet to be decided - allocation and price are for the government to decide. By December, production is estimated to go up to 80 mscmd. Peak output from the block is estimated at 120 mscmd.
There is another urgency for the government, in the repeated media advertisements of the rival Anil Dhirubhai Ambani Group, thay RIL is 'utilising less than 40 per cent of its capacity and can triple production soon.
Yet, the petroleum ministry says there is a gas scarcity'. Since August 17, the ADAG has been placing ads in the national media, raising questions about the government's estimates of the KG basin relating to revenues, capex and production.
"The contractor of D6 block has approached us for making further allocation and we are working to allocate more quantities," said a petroleum ministry official.
ADAG's Reliance Natural Resources Ltd is in a legal battle with RIL over KG basin gas. ADAG is seeking supply of 28 mscmd gas from RIL at a price of $2.34 per mBtu under an earlier family agreement, when both were part of the same group. While the family contract was upheld by the Bombay High Court in June, RIL approached the Supreme Court against it.
The government, through an empowered group of ministers, allocated the initial 40 mscmd of KG basin gas to various sectors. Accordingly, 15 mscmd of gas was earmarked for the existing fertiliser plants, 18 mscmd to existing power plants, three mscmd to existing LPG plants and the remaining five mscmd for city gas distribution projects. The government has also fixed a price of $4.2 per mBtu for the five-year period beginning April 2009.
The official said that the EGoM has not been reconstituted after the United Progressive Alliance government began its second term in office. However, the broad guidelines for allocation are already there and the focus will remain on priority sectors like fertiliser and power.
