With commercial production of natural gas from the Krishna-Godavari block just days away,Reliance Industries Limited (RIL) has signed the much-awaited Gas Sales and Purchase Agreement (GSPA) with fertilizer companies for supply of natural gas to be produced from the KG-D6 block. The GSPAs were signed with 12 customers in the fertilizer sector for supply of approximately 15 million standard cubic meters (mmscmd) natural gas at 15 different urea manufacturing facilities.
RIL will start producing gas from the KG field by end-March 2009. The duration of contract under the GSPA is 5 years. The gas price in GSPA is as per the formula approved by the Government and the supply of gas is expected to commence shortly. East-West Pipeline built by Reliance Gas Transportation Infrastructure Limited (RGTIL) would be used to transport gas from KG-D6 block to the fertilizer companies,by inter-connecting with pipelines of GAIL and GSPL.
Fertiliser companies also signed Gas Transportation Agreement (GTA) with RGTIL. Fertiliser companies that will be supplied natural gas from KG D6 include Nagarjuna Fertilizers & Chemical Limited,Rashtriya Chemicals & Fertilizer Limited,IFFCO,KRIBHCO,GSFC,GNFC,Tata Chemicals,National Fertilizer Ltd,Chambal Fertilizer & Chemicals Limited,KRIBHCO Shyam Fertilizers Ltd,IndoGulf Fertilizer & Shriram Fertiliser & Chemicals Ltd.
Said PMS Prasad,President and CEO (Petroleum),With the signing of GSPAs,KGD6 gas would reach all gas-based urea manufacturing units in India,and would eliminate the deficit in gas supply being currently faced by these units. The supply of natural gas to these units would result in additional production of approximately 7 million tonnes of urea per annum thereby reducing Indias import dependence and also reducing subsidies by the Government. We look forward to having a long-lasting and mutually beneficial relationship with the fertilizer companies.
US investment bank Goldman Sachs has forecast that Krishna Godavari Basin D-6 gas will substitute about 7 per cent of India’s oil consumption in FY10 and about 10-11 per cent over FY11-FY14. According to the firm,the total import bill could fall by one per cent in FY10 and an average of 3 per cent during FY11-FY14. The infrastructure sectors will also benefit from the gas.