RIL paying $9 for buying spot LNG

NEW DELHI: Reliance Industries, the operator of India's biggest gas field, today said it is paying over USD nine 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 USD 6.5 per mmBtu at its plants in Gujarat, the spot-LNG is costing it USD 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.

The government yesterday formed a ministerial panel led by Finance Minister Pranab Mukherjee to allocate natural gas from the company's field to new users.