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KG basin gas on the anvil

The much awaited production of KG basin gas is finally on the horizon. As per a leading business daily, Reliance Industries (RIL) has signed contracts with 12 fertiliser firms for the sale of its first stream of natural gas from its D6 block in the Krishna Godavari basin. The company will sell around 15 m standard cubic meters of gas per day (mscmd) to these firms from mid April at US$ 4.2 per m British thermal units (mbtu). In addition, these companies will pay a transportation margin to RIL, Gail or Gujarat State Petronet. Hence, the actual delivered price will range from US$ 5.34 per mbtu in Andhra Pradesh to US$ 6.21 in Uttar Pradesh.
Fertiliser companies have received a priority allocation because of the gas utilisation policy. Other users like gas based power plants and city gas distribution will receive a share from the subsequent streams from the D6 block. The production is set to increase to 40 mscmd during the year and eventually to 80 mscmd. It may be noted that production was supposed to commence last year but got delayed due to the litigation from RNRL and NTPC. Given that India still imports more than 70% of its hydrocarbon requirement, domestic production is a matter of enormous significance.

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