Reliance Industries Limited (RIL) is set to sign a pact with Indo Gulf Fertilizers to sell natural gas from its gas reserves in KG-D6 located near the Bay of Bengal. RIL has signed a Gas Sales and Purchase Agreement (GSPA) with Indo Gulf Fertilizers that it will sell 0.228 million standard cubic meters per day, which will be supplied to the latter’s Jagdishpur plant.
The supplies will begin as soon as the negotiations between Indo Gulf and GAIL reach an agreement over the transportation of the gas using state-owned pipelines. Along with this, Reliance Industries will also sign a GSPA with fertilizer cooperative IFFCO to sell 0.27 mmscmd of gas to its Phulpur plant.
About RIL’s KG-D6 plant:
Reliance’s KG-D6 plant began its production in April 2009. From then, till March-2010, it had reached its highest output upto 69.43 mmscmd . The highest production was comprised because of the largest blocks – Dhirubhai-1 and 3 from the 18 other blocks found in KG-D6. Apart from this, the only oil discovery- MA field also contributed in the highest productivity of natural gas. Soon after, due to water and sand ingress in the fields, one-third of its part became unsuitable for operations. The gas-production at the KG-D6 fields has seen steep downfall since 2011. The production was so low that the government had ordered a pro-rata cut in the gas supplies to 25 power plants, which were allocated 28.90 mmscmd of gas earlier. Apart from the power plants, there were 16 fertilizer plants, which were allocated 15.668 mmscmd of gas. The government however didn’t order a cut in the gas supply to these fertilizer plants.
Furthermore the gas production is still declining. At present the gas production is about 17 mmscmd. The gas supply to the power plants has totally been stopped. Of the 17 mmscmd gas produced currently, 15.2 mmscmd was supplied to urea making fertilizer plants and the miniscule portion remaining was supplied to the state-owned GAIL India’s LPG Extraction units.
Now, after the agreements of RIL with Phulpur and Jagdishpur fertilizer plants, the supplies to GAIL will decrease further. Consequently, there will be gas left for the power plants which are placed on the least priority as of now for receiving gas from KG-D6 reserves. The current gas supplies from KG-D6 only suffice the gas requirement of fertilizer and LPG units.