Reliance says no to cut in KG basin gas output

The government has asked Reliance Industries to cut gas output from its eastern offshore KG-D6 fields so that imported fuel stocks can be cleared, a direction that the Mukesh Ambani-run company has rejected.

The petroleum ministry had in a meeting on April 30 asked Reliance to explore cutting down output so that the imported liquefied natural gas (LNG) accumulating at Petronet LNG Ltd’s Dahej terminal in Gujarat can be sold to customers.

“Reliance may examine whether it would be possible to cutback the production from KG-D6 fields by some amount for a short period,” according to the minutes of the meeting.

“Reliance has not agreed to or planned to cut down on the production of gas from KG basin,” a company spokesperson said.

Petronet, which ships gas in its liquid form (LNG) from Qatar on a long-term contract, is facing a glut after three fertiliser plants that used LNG as feedstock shut down for maintenance and a power plant owned by NTPC tripped.

By asking Reliance to cut output, the ministry had hoped it can push the imported gas to customers using KG-D6 gas.

Observers expressed surprise at the decision saying imported expensive gas was being prioritised over cheaper domestic gas. “The priority should be to use cheaper fuel first and use,” observers said.