Billionaire Mukesh Ambani-run Reliance Industries will start selling natural gas from its eastern offshore KG-D6 fields by April to ease fuel deficit at power and fertiliser units, the government has said.
"Supply of gas from KG-D6 is likely to begin by April 2009," oil minister Murli Deora has said at the meeting of Parliamentary Consultative Committee on Tuesday evening.
Reliance is likely to start gas production by the first week of March but the initial volume would go for testing the equipment and building pressure in the pipeline. The first sale may by early April.
Initial output may be 5-10 million standard cubic meters per day that would rise to 15-20 mmscmd by April and to 40 mmscmd by July/August.
"It has been decided to supply the first 40 mmscmd of natural gas to meet the shortfall in existing gas-based urea plants, LPG plants and power plants," Deora said.
KG-D6 gas would be a boon for the fuel-starved fertiliser and power companies, increasing production at cheaper rates.
Reliance gas that is being priced at USD 4.20 per million British thermal unit -- at least 50 per cent cheaper than competitive domestic gas -- would increase supply of urea in the country and bring down fertiliser subsidy, he said. It would also increase power generation and reduce dependence on imported oil to meet energy needs.
Reliance, Deora said, had started crude oil production from its deepsea KG-D6 block in Krishna Godavari basin on September 17, 2008, with initial output of 8,000 barrels per day.
"With commencement of the first crude oil production from deepwater of KG Basin, the year 2008 has become a landmark in the history of exploration and production in the country," he said.
The initial volumes from KG-D6 would be sold to gas-based urea manufacturing plants and the Dabhol power plant in Maharashtra. Fertiliser plants with a cumulative consumption of over 14 mmscmd have been identified.
The 2,150-megawatt Ratnagiri power plant, erstwhile known as Dabhol project, would get priority equal to fertiliser units. It will initially get 1.4 mmscmd, which would rise to 2.7 mmscmd by May/June and finally to 8.5 mmscmd before year-end.
Next in the order of priority is power sector. Plant-wise allocation within a maximum outlay of 18 mmscmd for the sector would be decided at a meeting this week.
Power plants in Andhra Pradesh, the landfall point of KG-D6 gas, will get gas keeping 70 per cent Plant Load Factor (PLF) (or installed capacity) in mind, while those in the rest of the country would get gas at 60.8 per cent PLF.
India, the world's second-fastest growing major economy, imports 75 per cent of its energy needs and its domestic gas production is insufficient to meet the demand from fertiliser makers and power generators.
Output from the KG-D6 field will reach a peak of 80 mmscmd by 2012 and the decline starting five years later will continue until 2020.
Deora said with the commissioning of a 29 million-tonnes per annum refinery at Jamnagar by Reliance Petroleum, the refining capacity of the country has increased to 177.97 million tonnes.
"Out of this, 105.5 million tonnes is in the public sector and the balance 72.47 million tonnes is in the private sector," he said. "The country is not only self-sufficient in the refining capacity for its domestic consumption but also exports petroleum products substantially."