RIL plans to import LNG for captive use

Reliance Industries (RIL), the country’s most valuable company, has begun talks with Shell India, the Indian unit of Royal Dutch Shell and Petronet LNG, to import liquefied natural gas (LNG) from global markets, barely a week after it began gas production from its Krishna-Godavari basin. RIL requires gas for its own use at its power and petrochemical plants. However, with the government not allowing the company to use the gas for its own use in the first phase — up to 40 million standard cubic metres — RIL is now looking at alternative options. RIL, which recently commissioned its new refinery, requires additional gas, both as fuel and feedstock. It is estimated that RIL would require almost eight shiploads of LNG over the next shipments, a person close to the development said. It is in talks with both Shell and Petronet as they are the only two companies that have infrastructure to gasify the liquefied gas. While Shell would be a more strategic fit — as RIL and the latter are also involved in talks for a joint venture for retailing auto fuel — Petronet is likely to offer a better price. Unlike Shell, which has a gasification plant modelled as a merchant plant — without long-term customers or suppliers — Petronet gets the LNG from long-term suppliers and spot buys. Petronet offers its customers gas at pooled prices which is, thus, relatively cheaper than competitors’ who have to depend on market prices. RIL will take a call shortly depending on who would offer a better deal, the person said. The government has drawn up a list of customers for RIL as per the utilisation policy. Preference has been given to fuel-starved fertiliser plants and power plants which have been using expensive liquid fuel like naphtha as a fuel and feedstock. RIL, which is seeking to replace its liquid fuel consumption with green natural gas, had sought government’s permission to use some of the gas it produces for its captive use at its own plants, a person close to the development said. It is expected the government may give RIL some gas for its use at the petrochemical and power plants in the second phase around December when the gas would be scaled up to 80 mmscmd.