Mittal backs Mukesh on gas pricing

Steel tycoon Lakshmi Mittal today backed fellow billionaire Mukesh Ambani, who is fighting opposition to get a market determined price for gas to be produced by his firm Reliance Industries, saying globally fuel prices were much higher than those proposed by Ambani.

During his meeting with Petroleum Minister Murli Deora, Mittal said his steel plants were getting gas at no less than $6 per million British thermal unit (mBtu), much lower than $4.33 per mBtu price proposed by RIL. Official sources said Mittal made the comments when Deora asked him about the gas price scenario.

The world's fifth-richest person and chief executive officer of the world's largest steel producer Arcelor Mittal told Deora that new long term contracts for gas, be it piped or transported in its liquefied form (LNG), were not less than $6 per mBtu and spot prices ranged around $9 per mBtu.

In comparison, after a competitive bidding process, RIL arrived at a price of $4.33 per mBtu for the gas it will produce from July 2008 from the Krishna Godavari basin fields.

RIL's gas pricing has been opposed by certain sectors, notably power, and a firm run by Mukesh's younger brother, Anil. The power sector wants delivered price of gas not to exceed $3 per mBtu.