Consult industry before offering D6 gas: Reliance

Vol 13, PW 14 (17 Dec 09) Midstream & Downstream

Reliance is calling on the government to involve consumers in the D6 gas â€کallocation’ process, to ensure that all gas produced from the prolific field is better utilised.

“Ministers allocate D6 gas for political reasons,â€‌ says a Reliance source, “and don’t care if the consumers they choose can actually take the gas.â€‌ In the latest allocation meeting of the Empowered Group of Ministers on October 27, for example, the sponge iron sector received 4.19m cm/d, “solely because oil secretary RS Pandey was formerly steel secretary.

â€‌ Reliance is currently forced to cut production at D6 because government-designated customers are not taking their full earmarked quantities. Some of these customers are not taking supplies because they do not have pipeline connectivity, we hear, while others have not yet switched their machinery and systems to operate with gas.

“We are ready to produce 65m cm/d today as committed to the government but can’t go beyond 48m cm/d because customers are failing us,â€‌ we learn. “At this rate how can we reach the 80m cm/d committed to the government by March 2010â€‌ We also learn the most Reliance has produced so far on any given day is 50.88m cm on November 29, after which average production hovered around 48m cm/d.

As for the May 2008 and October 2009 allocation meetings, a total 91.61m cm/d of D6 gas was set aside, mainly for power and fertiliser companies. But though 43.165m cm/d in total was set aside for the power sector, it could actually take 22.5m cm/d only! Even today, more than a month later, the government still can’t identify specific factories or power stations entitled to the new D6 gas allocation.

Reliance also stresses the paradox that while it has to cut production of cheap D6 gas, expensive LNG is still being imported into India!