Government owned-gas transmission and marketing major GAIL India, on Friday, signed a Gas Sales and Purchase Agreement (GSPA) with Mukesh Ambani-controlled Reliance Industries to source gas from the latter’s oil fields in the Krishna Godavari basin in the eastern offshore.
The agreement envisages purchase of 2.6 million standard cubic meters per day (mmscmd) of gas from RIL’s KG-D6 fields at government approved price of $4.2 per million British thermal unit (mBtu). Gas supplies are expected to begin from September 3, according to GAIL sources. However, in our opinion, the Government / GAIL should be entitles to the GAS at a much lower price of $2.4 per mBtu. This matter certainly needs to be investigated.
The LPG sector has been placed at the third spot in the government’s priority list for KG-6 gas allocation. RIL has so far contracted gas supplies to 15 fertiliser companies, 19 power plants and three steel makers.
Gas output from the KG-6 fields is currently pegged at nearly 37 mmscmd, out which around 50% goes to gas-based power plants.