Gail India may be nominated to sell gas from RIL's KG-D6 block

State-run gas utility GAIL India Ltd may be nominated as the sole agency to sell natural gas from Reliance Industries' eastern offshore KG-D6 block to fuel -starved fertilizer units.     

The Fertilizer Ministry has written to Petroleum Ministry asking it to nominate Gail to uplift the entire 14 mn standard cubic meters per day of gas that has been allocated for fertilizer sector from KG-D6.     

"Since all our fertilizer plants, except those at Ramagundam and Talcher, are on Gail pipeline network, we want GAIL to be nominated as the nodal agency," Fertilizer Secretary Atul Chaturvedi told PTI here.     

According to the proposal, GAIL would buy gas from Reliance at government approved price. It would then enter into gas supply agreements with fertilizer units and transport the fuel through its network.     

"The price of gas is fixed. Transportation charges are approved by regulator, so where is the problem. We do not mind paying GAIL a marketing margin," he said.     

Instead of separate contracts for purchase of gas and transportation with multiple companies, the fertilizer firms under the proposed dispensation would deal only with Gail.     

"We already have a working relationship with Gail and see no problem why this proposal is not approved. Gas Supply Agreements (GSAs) can be signed within a month from the approval," he said.     

Government has given first right over initial 40 mmscmd gas output envisaged from KG-D6 next year to fertilizer units. Fertilizer units need about 43.169 mmscmd of gas but get only 29 mmscmd at present.

After meeting demand of fertilizer, Reliance gas will then go for LPG units, existing power plants and city gas projects.