Gas for Ispat Steel

Vol 15, PW 5 (08 Sep 11) News in Brief

Plans by Sajjan Jindal-controlled JSW Ispat Steel to expand manufacturing capacity at its Dolvi steel factory in Maharashtra are in disarray because of dwindling gas supplies from Reliance’s D6 block.

PETROWATCH learns JSW Ispat wants to increase Dolvi capacity from 3.3m t/y to 4m t/y by 2013, and might need an additional 400,000 cm/d of gas supplies. “But we cannot decide whether to go ahead or wait for another domestic gas source (besides D6) to come up,” says a company source.

“R-LNG is very expensive.” Dolvi was receiving 590,000 cm/d of D6 gas until May this year when its supplies were cut by the oil ministry because of declining production and ‘diverted’ to government-designated priority customers in the power and fertiliser sectors.

Dolvi is forced to buy an equivalent amount of R-LNG to plug the gap at nearly $15/mmbtu against the $5.20/mmbtu (‘delivered’) it was paying for D6 gas. “Our steel production costs have risen as a result,” we hear.