"A pro rata cut is a must as production has declined to 50.5 mmscmd (million standard cubic meters per day) due to some technical problems in the KG-D6 block," said an oil ministry official who did not want to be identified. The block was producing about 52-53 mmscmd in early March.
Power and fertiliser sector consumers are seeking higher supply. An empowered group of ministers (EGoM) has identified existing gas-based fertiliser plants as top priority customers, followed by existing gas-based liquefied petroleum (LPG) plants and existing power plants. City gas distribution (CGD) projects, steel, petrochemical, existing refineries and captive power units figures in the priority list in declining order.
Consumers in priority sectors such as power and fertiliser firms are facing a fuel supply shortfall between 8-13% in the last three months.
The EGoM has made firm allocation of 63.309 mmscmd of KG-D6 gas as per national priority but so far Reliance had contracted about 57 mmscmd gas to the government-identified customers, the official said. The actual supply was even less than contracted quantities due to transportation bottlenecks.
State-run fuel transporters Gail India, which was initially supplying about 33-34 mmscmd of KG-D6 gas through its system, has also seen a decline in the volume to 31 mmscmd. Gail's gas pipeline network is the main transportation system for KG-DG gas. Balance gas from the KG block is evacuated by pipelines owned by other entities including Reliance Gas Transportation Infrastructure.
The empowered panel has accorded a firm allocation of 15.708 mmscmd KG-gas to fertiliser sector, the number one priority. But the sector is getting a supply of about 13 mmscmd. The number two priority, the existing gas-based liquefied petroleum gas (LPG) plants are also getting proportional 8-13% cut against a total fuel allocation of 2.594 mmscmd. And Power sector, the third in the priority list, is getting about 25-26 mmscmd gas against an allocation of 32.677 mmscmd.
After producing first gas from the block on April 2 last year, Reliance had rapidly ramped up production from KG-D6 to 60 mmscmd in a short period of nine months but output subsequently declined because of technical reasons.
The government had awarded the KG-D6 block (KG-DWN-98/3) to a consortium of RIL and Niko in 2000, under the first round of auction of (Nelp-I). In 2002, the consortium made the largest gas discovery of the time in the block. RIL holds 90% stake in the asset, while balance 10% is held by Niko.
