The government has asked Reliance Industries to supply natural gas from its D6 fields in the Krishna-Godaveri basin in the eastern offshore to the beleaguered Dabhol power plant.

Power plants are among top priority in the allocation of natural gas under the government's policy.

In a press note issued today, the government also said the supply of natural gas would be made at a selling price of $4.2/mmbtu (for crude price greater or equal to $60/barrel) for all customers across all sectors from D-6 field, as decided in the empowered group of ministers (EGoM) meeting held on 12 August. This excludes transportation cost, taxes, etc, it said.

The EGoM at its meeting held on 28 May had decided that 40 mmscmd of natural gas expected to be produced from RIL's KG D6 field by March 2009 would be supplied to priority sectors.

While confirming the overall prioritisation of sectors, the government has accorded priority to Ratnagiri Power Project Limited (RGPPL) along with fertilizer units. It has been decided that RGPPL be supplied 1.4 mmscmd during January to March 2009 and 2.7 mmscmd during April to September 2009, subject to commencement of production, within the overall allocation of power sector (18 mmscmd) decided earlier. Further, 8.5 mmscmd would be supplied to RGPPL after September 2009 from the production from RIL's KG D6 field.

The decisions taken by the government regarding supply of natural gas to priority sectors, along with the modification decided thereafter, would be made applicable to the first 40 mmscmd of gas produced from RIL's KG D-6 field, irrespective of the date on which this production is attained, the press note said.

With regard to supply of 18 mmscmd earmarked for the power sector to various power plants, it has been decided that after RGPPL, priority should be given to the power plants in Andhra Pradesh. The ministry of petroleum and natural gas would discuss with ministry of power to arrive at a mutually acceptable decision and decide supply of natural gas to various power plants, the release said.

For sale of gs to NTPC, however, RIL would have to wait for a verdict from the court.

The ministry will hammer out a workable gas sale purchase agreement (GSPA) for sale of gas to be produced under NELP to consumers across the country, in accordance with the decisions of the government and taking into account court orders, after consultations with the concerned ministries and other stakeholders, the release said.

The ministry would take decisions regarding supply of natural gas to sectors/individual customers consequent to gas being available on account of short offtake, delay and any other unforeseen circumstances.

It will also facilitate finalisation of GSPAs by fertilizer companies for supply of gas.

The existing natural gas-based sponge iron/steel plants after the sectors prioritised earlier would be the next in priority. However, the supply would be made from the production beyond the first 40 mmscmd to be produced from RIL's KG-D6 field.

It had been earlier decided to supply 3 mmscmd for existing natural gas-based LPG plants. It has been decided that the ministry would undertake a study of the cost benefit analysis of supply of 3 mmscmd natural gas to LPG plants.