An Empowered Group of Ministers headed by Finance Minister Pranab Mukerjee will meet shortly to decide on allocation of natural gas produced by Reliance Industries to users in power, petrochemical and refinery sectors.

The seven-member EGoM (a Cabinet sub-committee) may meet as early as this week, sources said.

RIL now has capacity to produce at least 65 million cubic meters per day (mmscmd) of gas from its eastern offshore KG-D6 fields but is forced to restrict the output to under 35 mmscmd for lack of government-identified buyers.

The EGoM includes Home Minister P Chidambaram, Petroleum Minister Murli Deora, Law Minister Veerappa Moily, Fertiliser Minister M.K. Alagiri, Power Minister Sushil Kumar Shinde and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

When contacted, Oil Secretary R.S. Pandey said the EGoM has been constituted with the mandate to allocate gas to users and pricing of gas was not included in its terms of reference.

“The previous EGoM had fixed the price of gas (at $4.205 per million British thermal unit) for five years and so that continues,” he said.

The previous EGoM, which ceased to exit with General Elections in May this year, had allocated the first 40 mmscmd of gas from KG-D6 to fertiliser units, power plants, city gas projects, LPG plants and steel sector.

Demands from power plants, petrochemical units and refineries, including those owned by RIL, would be considered.

The EGoM will consider demands of the power sector, petrochemical units and refineries,” Mr. Pandey said.

Demands for about 100 mmscmd gas have been made by users from power plants to refineries to steel units.

RIL cannot sell gas to any of the users, including its own refineries, which are starved of fuel, unless allocation is approved by the government.

The company buys 10-12 mmscmd of liquefied natural gas (LNG) from spot market at over $9 per mmBtu.

RIL has so far contracted gas supplies to 15 fertiliser firms, 19 power plants and three steel makers. It has also signed a Gas Sales and Purchase Agreement (GPSA) with GAIL for supply to its LPG plant and city gas distributors like Indraprastha Gas Ltd for city gas.

But some of the customers identified by the government so far are not taking KG-D6 gas for reasons other than price.

State-run NTPC and Essar Power are yet to draw even a single unit from RIL’s KG basin D6 fields


EGoM on gas allocation re-constituted October 20, 2009

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