No KG D6-Gas Supply for India's Power Sector by 2013-14, Says CEA

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Researched by Industrial Info Resources India (New Delhi, India)--In a shocking revelation, India's Central Electricity Authority (CEA) (New Delhi, India) has indicated that the supply of gas from Reliance Industries Limited's (BSE:500325) (Mumbai, India) beleaguered KG-D6-block will be almost nil for India's power sector during the next financial year, given the dwindling production from the block and priority-allocation granted to the fertilizer and liquid petroleum gas (LPG) sectors.

The situation is highly alarming, as the country is already losing nearly 35 billion kilowatt-hours of potential power generation annually from acute shortages of fuel for gas-fired power stations. In addition, power plants with approximately 9,500 megawatts (MW) of combined capacity are expected to be commissioned over the next two years.

CEA has asserted that with such dismal gas availability figures, the country's 25,000 MW of gas-fired power plants, (15,000 MW of existing plants and 9,500 MW of new capacity) could run only at a plant load factor (PLF) of 32%, which is unviable.

Production from Dhirubhai-1 and 3, the largest among the 19 oil and gas discoveries Reliance Industries has made in the KG-DWN-98/3 or KG-D6 block, slipped to 26.51 million standard cubic meter per day (MMscmd) during the first week of May 2012. Together with 6.15 MMscmd output from the MA oilfield in the same block, KG-D6 produced 32.66 MMscmd during the same week.

A latest gas-supply projection report for the D-6 field shows a production of 28 MMscmd during the current financial year. Gas production is expected to slip to about 24 MMscmd in 2013-14, and then to 20 MMscmd by 2014-15. Availability of domestic gas from sources other than the D-6 block has been estimated to be 24 MMscmd in 2012-13 and 21 MMscmd in 2013-14, compared to the current availability of 38 MMscmd.

The KG-D6 output has fallen since reaching a peak of 61.5 MMscmd in March 2010, as RIL shut wells after water and sand ingress. Output from KG-D6 is short of the 70.39 MMscmd-level (61.88 MMscmd from D1 and D3 and 8.5 MMscmd from the MA field) envisaged in the field development plan approved in 2006.

With a scant supply of only 57.67 MMscmd during the last three quarters of fiscal year 2011-12, the gas-fired power stations in India were running at an average plant-load factor of 63.73%. About 81.44 million standard cubic meters per day of gas is needed to operate these stations at a 90% plant-load factor.

Gas supply to the gas-fired power plants has always been inadequate. The production and supply of gas has never kept pace with the growing demand of gas in the country, including that of the power sector.

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