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State-run power utility NTPC today started receiving natural gas from Reliance Industries' (RIL) eastern offshore KG D-6 fields at the government-approved price of $4.2 per mmBtu price. NTPC's Anta plant in NCR region this morning started receiving 0.6 million standards cubic meters per day of KG D-6 gas, industry sources said.

KG D-6 gas will replace the costly LNG that the plant currently uses and will save Rs 150 crore in power generation cost annually. The government had allocated NTPC 2.67 mmscmd of gas from KG D-6 fields but the company had on September 23 signed Gas Sales and Purchase Agreements (GSPA) for less than one-fourth of the earmarked volumes.

NTPC had signed contracts with RIL to buy 0.13 mmscmd of KG D-6 for its Faridabad power plant in Haryana, 0.03 mmscmd for Anta in Rajasthan and 0.45 mmscmd for its Dadri unit in Uttar Pradesh. However, due to constraints in state-run gas utility GAIL India's pipeline to transport KG-D6 gas, all of the 0.61 mmscmd would be consumed at Anta plant for the time being, sources said.

The production of gas from RIL's KG basin has gone up to 45 mmsmcd but is still short of its present capacity of 65 mmscmd. Sources said of the 2.67 mmscmd originally allocated by the government to NTPC, its Kawas power plant in Gujarat was to get 1.75 mmscmd and Gandhar 0.30 mmscmd.

But the state-run utility does not want to use KG D-6 gas as it is seeking from RIL gas for expansion projects at the two sites at the price of $2.34 per mmBtu that RIL had committed in a 2004 tender. NTPC wants to swap the allocations for these with the gas its plants in northern India get from Panna/Mukta and Tapti fields.

The proposal entails partially diverting subsidised/PMT gas for NTPC's power plants in the northern part of the country to Kawas and Gandhar. The gas allocated to Kawas and Gandhar will then be diverted to NTPC's plants in the north. Sources said for the two plants to operate at a minimum 70 per cent of the capacity (Plant Load Factor), a combined 2.71 mmscmd gas would be needed.

So, 2.71 mmscmd of subsidised/PMT gas would be diverted from NTPC's plants in northern India to Kawas and Gandhar. An equivalent quantity would be moved from D6 to these plants in North India. "Essentially, this meant that gas allocation had to be increased, which has now been done," an official said.

RIL is currently producing about 45 mmscmd of gas from KG D-6. Of this 14.45 mmscmd is being supplied to fertiliser plants and over 24 mmscmd to power plants.


Source - Business standard