Reliance shifts away from LNG to its own gas

Vol 24, PW 12 (06 May 21) Midstream, Downstream, Renewables

Reliance is slowly replacing imported LNG with domestic gas from its eastern offshore fields and the Sohagpur CBM block in Madhya Pradesh.

Reliance brought in just one LNG cargo in April (2021) after importing no shipments in January (2021) when spot LNG prices jumped to $32.49/mmbtu on January 12 (2021). "Reliance is scaling back LNG imports," says an industry source.

"Gradually, it wants to shift from LNG to domestic gas." Reliance landed only two full cargoes at Hazira in March 2021, lower than its earlier average of three or four a month.

On March 23 (2021), it received a load from Qatargas and on March 11 from Adnoc LNG. On March 3 (2021), Reliance shared an Adnoc shipment with Shell.

Until now, it has met the 18.5m cm/d needed for its refinery and four petrochemical plants primarily through LNG imports. "Two reasons explain why Reliance is shifting away from LNG," adds our source.

"First, it is replacing R-LNG with syngas at its Jamnagar refinery; second, it is using domestic gas from its fields." Reliance's strategy shift follows gas marketing reforms announced by the cabinet's economic affairs committee on October 7 (2020).

One critical reform was a government decision to allows affiliate companies to participate in their own gas auctions. "Under this policy, a Reliance affiliate company can bid for gas from one of Reliance's blocks," we hear.

No one was surprised when Reliance and BP joint venture India Gas Solutions booked 620,000 cm/d of 820,000 cm/d on offer from Reliance's CBM Sohagpur block in March (2021); GAIL picked up 170,000 cm/d while Reliance Gas Pipelines took 30,000 cm/d. In February 2021, Reliance O2C secured 4.8m cm/d in an auction of 7.5m cm/d from the R-Series fields at KG-D6; GAIL booked 850,000 cm/d, and Shell took 700,000 cm/d.

Set up on January 24 (2019), Reliance O2C oversees the company's refinery and petrochemical assets.