Crisis in gas supply-I: RIL's output to be confined to just 60 mmscmd in the "near future"

The government seems to have finally waken up to the hard truth that RIL`s gas production is going to remain at around 60 mmsmcd in the near future. A recent note prepared by the petroleum minister for the Empowered Group of Ministers claims that "production has not gone beyond 60 mmscmd and now the contractor has informed that it is unlikely to increase beyond 60 mmscmd in the near future."

 The ministry touts a DGH estimate that says that production will increase to 80 mmscmd in 2012 and continue at that level till 2016, when the decline will begin.

RIL too has now made it clear that all allocation of gas should be done based on the 60 mmscmd figure.

The slowdown in RIL`s output has upset plans of gas consumers across the entire country. 

 In the fertilizer sector, for example, work was going on furiously on de-bottlenecking and expansion of fertilizer plants, conversion of naphtha-based and fuel oil based fertilizer plants and revival of closed fertilizer plants. The DOF has projected cumulative additional requirement of gas in 2011-12, 2012-13 and 2013-14 at 3.39, 14.42 and 54.78 mmscmd of gas.The fertilizer industry has been given priority in the allocation of gas but clearly the demand is huge and it is unlikely that domestic gas sources will be able to whet the appetite of the industry.

The situation in the power sector is even worse. 

 The power ministry has said that there is already a requirement of 18 mmscmd for units to be commissioned in 2009-10 and 2010-11. Of this, the EGOM had already allocated 6.33 mmscmd to five power plants. Another 11.67 mmscmd will be required for 2010-11.Then again, promoters of four power plants -- Sravanthi Energy (225 MW), Lanco-III (742 MW) and GMR, Vermagiri (768 MW) -- have announced that they will also be commissioned in 2011-12. Pragati Power Corporation Ltd has also informed that they will be commissioning their 750 MW plant in the same year. The total requirement comes to 12.25 mmscmd.

 Many requests have come in from various quarters for supply of gas for power plants. The Ministry of Power has sent a list of 78 projects with a gas requirement of a whopping 488 MW, excluding projects already under construction.There is also the contested case of allocation of 12 mmscmd of gas to NTPC at a price of $2.34/mmbtu for the power major`s Kawas and gandhar power plants. The issue is now under contest in the Bombay High Court.