RIL denies hoarding charges;asks for users of incremental gas

Rubbishing Anil Ambani Group's charges of "hoarding" gas and creating "artificial scarcity", RIL Executive Director and Head of Oil and Gas Business PMS Prasad said customers for about one-fourth of the initial 40 mmscmd of gas from KG-D6 fields are yet to draw due to failure at their ends.

Anil Ambani Group, which is fighting a legal battle with Reliance Industries for obtaining gas at a price of USD 2.34 pet mmBtu had alleged that RIL was deliberately under producing to create artificial scarcity.

The Supreme Court is to hear the case from October 20.
In a letter to Petroleum Secretary R S Pandey, Prasad said of the customers identified by the government to receive the initial 40 million standard cubic meters per day of gas, NTPC, Dabhol, Essar and GAIL are yet to draw a single unit.
NTPC, which was allocated 2.7 mmscmd, is yet to sign a contract, while Ratnagiri Gas and Power - the owner of Dabhol - has signed a contract for 2.7 mmscmd but has not begun drawing yet. Essar and GAIL between them are expected to start taking 4 mmscmd of gas by next month.

"Of the allocated quantity of 40 mmscmd, allocation to the extent of 9.4 mmscmd remains un-operational till date," he wrote. "No customer who has been allocated gas by government, has been denied gas for reasons attributable to RIL."

RIL said several firms had sought KG-D6 gas at government approved price of USD 4.2 per mmBtu and demanded "existing customers" in various sector be identified immediately so that production can be ramped up to 80 mmscmd.
"We request that the government allocate gas to the existing customers in various sectors so that the production from KG-D6 can reach 80 mmscmd in line with the approved development plan (for the fields)," Prasad wrote on August 28.

RIL, he said, was supplying 37 mmscmd of gas to customers identified by the Government. This includes 6 mmscmd on 'fall-back' or temporary basis to these customers as firms like NTPC, Dabhol and Essar fail to draw gas from KG-D6.
Without naming the Anil Ambani Group firm RNRL which had issued statements and released advertisements in newspapers charging RIL of "hoarding" gas and creating "artificial scarcity", he said "the ridiculous allegations" reflected "utter ignorance" of gas business and "incomprehension" of economics of complex large scale deepwater project.

"Since the government has already approved a price formula for 5 years, it is impossible to understand how any contractor can now benefit by not producing gas especially when there is so much demand as to immediately consume all 80 mmscmd gas at price approved by the Government."
"RIL in fact has been flooded by requests for supplies which it has been taking up with the Government for allocation to these consumers as it continues to ramp up production," he wrote.

However, GAIL's HVJ pipeline was running at near full capacity leaving hardly any capacity for more gas to the north till its expansion was completed by the year end, Prasad said.

Ramp up of production from KG-D6 to 37 mmscmd within 3 months of operation has been the smoothest ramp-up compared to similar projects in the world.
"Hoarding back production at this stage, after having made huge investments would be disastrous not only for the project but for the country as whole. It would be difficult to gauge the sanity of any developer who would deliberately set upon this path," Prasad said.