KG basin gas allocations to boost steel production

29 April 2009

According to official soures, the steel industry will be accorded priority in allocation of natural gas from Reliance Industries' Krishna Godavari basin once fuel production exceeds 40 mmscmd.

The decision to the effect has been taken by the Empowered Group of Ministers (EG0M) on pricing and commercial utilisation of gas under the New Exploration Licensing Policy they add.

Currently natural gas is being used as fuel in the production of steel by three manufacturers namely Essar Steel, Ispat Industries and Vikram Ispat. These manufacturers together produce over eight million tonnes of steel annually using the gas-based sponge iron technology.

The companies are currently sourcing their requirements through GAIL, which supplies around 23.42 per cent of the 5.76 mmscmd earmarked for them.

Essar Steel alone needs around six mmscmd of gas which is supplied under a separate arrangements with GAIL and other public-sector oil companies.

However, against an agreement for 3.1 mmscmd from GAIL, Essar is curretly being able to source only 20 per cent of the earmarked capacity. Similarly Ispat Industries is getting only 40 per cent of its allocations and Vikram Ispat too is in a similar position.