Gas output from KG-D6 block falls to record low

The development is expected to increase the urgency within the government to devise a gas price pooling mechanism to prevent Rs 1 lakh crore investments in gas-based generation capacity becoming non-performing assets.

The government appears favourably inclined to double the current gas price of $4.2 per million British thermal unit (mmbtu),following recommendation of a committee headed by C Rangarajan,chairman of the Prime Ministers Economic Advisory Council.

Imported gas will continue to be costlier even if the price revision for domestic gas is implemented. Price revision for D6 gas is due in 2014.

Already,gas allocation from KG D6 has reduced to nil for power projects.

Minister of state for power Jyotiraditya Scindia has called a meeting of the empowered group of ministers to consider changing the priority of gas allocation for power sector as against fertiliser now.

Initially,the KG D6 block was expected to achieve peak production of 80 mmscmd and half of the output was to go to the power sector.

Power sector comes third on the governments priority list for allocation after fertiliser industry and LPG plants. Gas supply to the fertiliser sector,however,remains unaffected.

RIL has so far drilled 22 wells on D1&D3 fields but has put only 18 on production so far. Half of these wells are now shut.

KG-D6 fields,which began production in April 2009,had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress shut down several wells.

Production further plummeted to 15.5 mmscmd this week after the contractor shut the ninth well.