Reliance Industries KG-D6 gas supplies to power plants stop

Natural gas supplies from Reliance Industries' KG-D6 block to power plants has completely stopped after output from the eastern offshore fields dropped to an all-time low.

Beginning this week, none of the 25 power plants that were allocated gas from KG-D6 fields, are getting any supplies, industry sources said.

This follows KG-D6 output dipping to an all-time low of 17.3 million standard cubic meters per day (mmscmd) this week. Of this, about 15.2 mmscmd was supplied to top priority urea-making fertiliser plants and about 2 mmscmd was consumed by state-owned GAIL India Ltd's LPG extraction units.

The rest was used to fire the East-West pipeline that transports the fuel from its landfall point at Kakinada in Andhra Pradesh to Brauch in Gujarat.

This left no gas for power plants, which are placed third on the priority list of consumers receiving KG-D6 gas.

A RIL spokesperson could not be immediately reached for comments.

The Bay of Bengal KG-D6 fields, which began gas production in April 2009, had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress led to shutting down of more than one-third of the wells.

This peak output comprised of 66.35 mmscmd from Dhirubhai-1 and 3, the largest of the 18 gas discoveries on the KG-D6 block, and 3.07 mmscmd from MA field, the only oil discovery on the block.

D1&D3 output has since fallen to 12-13 mmscmd while gas production from MA field, which had hit a peak of 6.78 mmscmd in January 2012, has fallen to just about 5 mmscmd.

Sources said when KG-D6 gas production began to dip sharply, the government in 2011 ordered a pro-rata cut in supplies to 25 power plants which had an original allocation of 28.90 mmscmd of gas.

But there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation.

The fall in KG-D6 output has already led to shutting down of the 1,967 mega-Watt power plant at Dabhol in Maharashtra. Ratnagiri Gas & Power Pvt Ltd (RGPPL), the firm that now runs the Dabhol plant, was allocated 7.6 mmscmd of KG-D6 gas.

Last week supplies from KG-D6 fields ran dry.

Sources said most of the power plants either had gas allocation from state-owned Oil & Natural Gas Corp (ONGC) or had tied-up imported liquid gas (LNG). With imported LNG costing three times the $4.205 per million British thermal unit price of KG-D6 gas, power companies are finding it difficult to operate their plants based on just imported fuel.