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Reliance Industries Ltd., India’s biggest company by market value, has been asked by the government to supply natural gas to Ratnagiri Gas & Power Pvt.Ltd. (RGPPL- Formerly known as Dabhol) on priority to help ease power crisis in Maharashtra.The price at which Reliance can sell natural gas from its largest field to all its customers was fixed at $4.2 per million British thermal units for crude oil equal to or more than $60 a barrel, the Oil Ministry said.

India’s domestic gas supplies are inadequate to meet surging demand from fertilizer and power companies for the cleaner- burning fuel. A group of ministers agreed in May that fertilizer makers would get first priority in the supply of gas from Reliance’s offshore field, which is expected to produce 40 million cubic meters a day by March 2009.The ministry has now included the 2,144-megawatt Ratnagiri project, operated by GAIL (India) Ltd. and NTPC Ltd., in the priority list along with the fertilizer companies.

The Ratnagiri plant will be entitled to supplies of 1.4 million cubic meters of gas a day from January to March, 2.7 million cubic meters from April to September and 8.5 million cubic meters after September, according to the ministry.

Electricity generators in the state of Andhra Pradesh, which is closest to Reliance’s D6 area in the Krishna Godavari field, will also get priority, the government said. The plants, along with Ratnagiri, will get as much as 18 million cubic meters of natural gas a day.The ministry said it will wait for a court verdict to decide on the price of gas to be sold to NTPC, India’s biggest power producer.

Mukesh Ambani is investing $5.2 billion to develop the Krishna-Godavari basin, the field that’s expected to more than double India’s gas output. Oil and gas produced from the field will save India $20 billion in foreign exchange, Ambani said. India’s gas demand may reach 14.1 billion cubic feet a day by 2020, U.S. consultant Facts Global Energy said in a report in July 2008.


Courtsey- Bloomberg