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Replying to a calling-attention motion in Rajya Sabha (Upper House of indian Parliament), Oil Minister Murli Deora said the USD 4.2 per million British thermal unit price fixed for gas produced from KG-D6 fields of Reliance Industries Limited (RIL) was lower than the average of USD 5.51 per mmBtu charged by UK's BG-led consortium for Panna/Mukta and Tapti gas.
It was also lower than the USD 4.3 per mmBtu price of gas produced from Cairn's Ravva Satellite fields and USD 4.75 per mmBtu for the UK firm's Lakshmi fields.
Deora, replying to the motion moved by Tapan Kumar Sen on availability of gas for power generation, said that an empowered Group of Ministers had fixed the price formula as well as usage of gas.
"The intention of the Government being to operationalise all gas based assets which were lying idle/unutilised due to non-availability of gas," he said.
The eGoM-approved price formula provides for a maximum gas price of USD 4.2 per mmBtu at USD 60 a barrel crude rate.
If crude falls to USD 25, RIL gas will cost USD 2.5 per mmBtu.
"I am confident that natural gas would fuel economic growth of the country and the government will do all in its power to ensure its use for natural priorities at reasonable price," he said.
Stating that demand has far outstripped the availability, Deora said the domestic gas availability in 2008-09 at 105 million standard cubic meters per day met just over half of the 197 mmscmd requirement.
"With the commencement of gas production from (RIL's) KG-D6 fields and increased import potential of liquefied natural gas (LNG), the gap between demand and supply has come down," he said.
RIL, which started gas production on April 2, is currently producing 35 mmscmd, he said adding the eGoM had allocated the first 40 mmscmd of gas from KG-D6 to fertilizer (15 mmscmd), power (18 mmscmd), city gas (5 mmscmd) and LPG plants (3 mmscmd).
"eGoM further decided that any shortfall in utilisation should be allocated to gas-based steel plants and to existing power plants, including captive power plants," he said.
RIL is selling gas to consumers on the basis of priority drawn by the eGoM approved Gas Utilisation Policy.
Deora said with the commencement of KG-D6 production, over 100 mmscmd gas was being supplied to power and fertilizer sector out of a total supply of 40 mmscmd.
"As a result of KG-D6 supplies, about 4,000 megawatt (MW) of additional power is being generated and an annual saving in subsidy on fertilizer of Rs 3,000 crore will be achieved," he said.
The RIL gas formula approved by eGoM is for five years.
"The price of gas being made available to the priority sectors is substantially lower than the prevailing prices of alternate liquid fuels like naphtha," Deora said.
To make available the natural gas in all regions of the country, the government has authorised several entities for laying gas pipelines to transport natural gas from the production centres to the potential consumers.
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