Reliance to sell gas in India at an 80-per cent discount to global prices

12 June 2008

Mumbai: Reliance Industries Ltd will start selling natural gas in the country this year at $25.20 per barrel equivalent of oil -  an 80-per cent discount to global prices of over $135 - helping the country reduce imports at record prices.

The Krishna-Godaveri basin gas field will produce 80 million cubic metres of gas a day, saving the country over Rs1,14,000 crore ($27 billion) in annual import bill, chairman Mukesh Ambani told shareholders today.

Reliance will also commission a transmission system for natural gas from the KG basin, off the eastern coast. The soaring cost of exploration and a cap on gas prices may, however, cut Reliance's profit margins.

The government has ordered Reliance to sell natural gas from the KG field for $4.2 per million British thermal units, less than the $4.5 it had sought.

Reliance aims to produce 240-350 million cubic feet of gas a day from the MA-1 field from the second half of the 2008-09 fiscal year, when gas production from two other fields in the block, D1 and D3, will also begin.

Reliance Gas Transportation Infrastructure Limited is setting up an East-West gas pipeline system to connect the country's cities for distribution of gas from the KG basin.