Oil Ministry orders Reliance to divert RCF gas to Andhra Pradesh

With output from Reliance Industries' KG-D6 fields hitting a new low, the Oil Ministry has ordered the Mukesh Ambani-run firm to divert a part of gas allocated to Rashtriya Chemicals and Fertilizers (RCF) to private power plants in Andhra Pradesh.

The ministry on May 31 ordered that a part of 2.1 million standard cubic metres per day of KG-D6 gas allocated to RCF's Thal urea manufacturing plant be diverted to Hyderabad-based Bhagaynagar Gas Ltd (BGL) and power plants in Andhra Pradesh under a so-called gas swapping arrangement.

Under this, state-owned gas firm GAIL India Ltd will make good the shortfall at Thal by supplying imported liquefied natural gas (LNG), sources privy to the development said.

While BGL and power plants will pay the actual price of imported gas, RCF will pay only $4.2 per million British thermal unit, the rate at which it had contracted KG-D6 gas.

Sources said with KG-D6 output dipping below 15 million standard cubic metres per day, there was hardly any gas left after meeting the requirement of urea manufacturing plants, which had been given top priority in receipt of the scarce fuel.

This has led to many power plants in Andhra Pradesh either shutting down or operating at sub-optimal capacities. So, a swap of KG-D6 gas meant for RCF's Thal plant and LNG meant for BGL or power plants has been ordered.