Reliance is to begin production from its prolific KG-D6 fields lying off the Andhra coast in January 2009 with an initial output of 5 mmscmd. This will rise to 25 mmscmd by March and to 55 mmscmd by July 2009. Dabhol, at present, gets about 5.4 mmscmd of imported gas for two of its three units at USD 4.98 per million British thermal unit. Petronet LNG imports 1.5 million tonnes a year of LNG from RasGas of Qatar at USD 8.5 per mmBtu but since this price is too high, the rates are averaged with cheaper long-term LNG imports to arrive at USD 4.98 per mmBtu. "As an alternate, KG-D6 will now be sold to Dabhol at Government approved rates of USD 4.20 per mmBtu," he said.
But NTPC, part-owner of the company that now runs the Dabhol power plant, had previously opposed buying gas from Reliance as it was
fighting a court case against the Mukesh Ambani-led firm on non-performance of a 2004 contract. "Even before the latest consideration came up, Reliance had last year offered to meet the entire 8.33 mmscmd demand of the three units of Dabhol at USD 4.2 per mmBtu but NTPC had refused the offer," the NTPC official said. NTPC had stated that it cannot buy any gas from Mukesh Ambani firm untill the issue of non-supply of 12 mmscmd gas by Reliance against a 2004 tender is settled.
Besides NTPC, the ministry had identified Essar Power and Torrent as the likely consumers of the fuel in line with the Gas Utilisation Policy approved by the government in June. The policy made it mandatory for Reliance to first supply gas to existing gas-based urea plants and then give three million standard cubic meters per day to LPG plants.
Thereafter, up to 18 mmscmd of gas was to be given to gas-based power plants that were lying idle/under-utilised or likely to be commissioned during 2008-09. The allocation was done for initial 40 mmscmd gas output from KG-D6.