International BusinessGAIL, RIL to sign gas pact this week
State-run GAIL India is likely to sign this week a contract with Reliance Industries (RIL) to buy natural gas from the latter"s KG-D6 fields for production of LPG.
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GAIL has been allocated 2.5 million cubic metres per day (mmscmd) of gas from RIL"s KG-D6 block for use in production of LPG.
"We are (in the) final stages and a Gas Sales and Purchase Agreement (GSPA) is likely to be signed this week," a GAIL official said.
The state-run firm will use the gas sourced from KG-D6 at six LPG production plants.
RIL has so far contracted gas supplies to 15 fertiliser firms, 19 power plants and three steel makers.
It is currently producing around 36 mmscmd gas from KG-D6, half of which goes to power plants.
The firm has the capacity to produce a little less than 60 mmscmd but is constrained to produce less as the government is yet to identify customers for buying gas beyond the initial 40 mmscmd, allocated primarily to fertiliser and power producers in accordance with the Gas Utilisation Policy.
Among the customers so far identified by the government, Ratnagiri Gas and Power (RGPPL), the firm that operates the Dabhol plant, and state-run NTPC are yet to draw even a single unit from RIL"s KG basin D6 fields.
Industry sources said the GSPA with NTPC for supply of 2.67 mmscmd of gas may also be signed soon. All outstanding issues have been settled.
Fertiliser firms, which had been given the first right over KG-D6 gas, are drawing 14.5 mmscmd, the highest ever after urea-making plants that were shut for maintenance became operational. Fifteen fertiliser firms have been allocated 14.96 mmscmd gas.
Power firms are drawing 18 mmscmd, while steel makers like Essar are drawing between 3.5 and 4 mmscmd.
The company cannot sell gas to any of the users, including its own refineries, which are starved of the fuel, unless allocation is approved by the Government.
RGPPL has signed for 2.7 mmscmd but is not taking any gas as it has a contract to buy gas from Petronet LNG till September-end. NTPC, which was allocated 2.67 mmscmd, has not signed the contract with RIL so far.