Reliance Industries, the operator of India's biggest gas field, today said it is paying over $9 for buying liquefied natural gas from spot market as the government has not allowed use of fuel pumped by it for captive use, a company official said.
"We are forced to pay more than what our gas would have cost us," RIL President of Oil and Gas Business P M S Prasad told reporters here.
RIL buys about 10 million standard cubic meters per day of regassified-LNG from Petronet LNG Ltd and Royal Dutch/Shell - the nation's only two LNG importers, for use in its refineries and petrochemical plants.
"We need about 15 mmscmd (of gas). We get some gas from Panna/Mukta and Tapti fields (in western offshore) and the rest has to be met from spot LNG purchase," he said.
Against the delivered price of RIL's eastern offshore KG-D6 field gas of $6.5 per mmBtu at its plants in Gujarat, the spot-LNG is costing it $8.5-9 per mmBtu, he said.
The government has so far named customers in fertiliser, power, city gas, LPG and steel sector for the first 40 mmscmd of KG-D6 output and is yet to notify new users despite the production capacity crossing 65 mmscmd.
The company cannot sell gas to any of the users, including its own refineries, which are starved of fuel, unless allocation is approved by the government.
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The government on Tuesday formed a ministerial panel led by Finance Minister Pranab Mukherjee to allocate natural gas from the company's field to new users.
RIL's eastern offshore KG-D6 field gas is priced at $4.205 per million British thermal unit on net calorific value (NCV) basis. On gross calorific value (GCF) - the basis used to price LNG - the KG-D6 gas at landfall point in Kakinada in Andhra Pradesh will cost just $3.75 per mmBtu.
The delivered price of KG-D6 gas to RIL's plants in Gujarat is $6.5 per mmBtu while the same for R-LNG is $8.5-9 per mmBtu (on NCV basis).
"This month we are paying over $9 per mmBtu for the spot-LNG," Prasad said. RIL had last month bought two spot cargoes of LNG (each comprising of 80 million cubic meters) from Petronet at $6.3-6.2 per mmBtu ex-terminal price (delivered price after adding taxes and transportation of $7.8-8 per mmBtu). In October, spot-LNG prices have gone up and RIL has not contracted any volumes from Petronet but may be taking gas from Shell's Hazira terminal.
Besides Mukherjee, the Empowered Group of Ministers (EGoM) would include as members Oil Minister Murli Deora, Power Minister Sushil Kumar Shinde, Fertiliser Minister M K Alagiri, Law Minister Veerappa Moily and Planning Commission Deputy Chairman Montek Singh Ahluwalia.