RIL finds imported gas cheaper than its own

Imported gas , sold on the west coast and north India, is now cheaper than domestic gas, after a sharp fall in global gas prices. While power and fertiliser companies like Chambal Fertilisers and IndoGulf in west and north India are buying gas from Reliance Industries (RIL) at a delivered price of around $6.85 per unit (million British thermal units), power plants in Uttar Pradesh are set to buy imported liquefied gas at $6.22 per unit, according to officials of two fertiliser companies and a power company. Ironically, the biggest beneficiaries of the sharp fall in global LNG prices could be India's largest private gas producer RIL itself and largest power producer National Thermal Power Corporation (NTPC). RIL, which needs gas as fuel and feedstock, is examining options of buying imported gas after being denied a share of its in-house gas at the KG basin for now. The company has begun talks with Petronet and Shell to buy liquefied gas to meet its immediate needs at least in the short term, as was reported by ET on April 10. Gas-starved power firms like NTPC, which could not get its entire gas requirement from RIL, too stand to save on fuel costs now that LNG prices have softened. Indeed, imported natural gas shipped in liquid form and gassified (adding to costs) before being sold is now available between $3.80 and $4.20 per unit in the global spot markets against $18 to $ 22 per unit in August 2008. Petronet LNG, and Shell India, the only two LNG companies in India, have quoted prices ranging $5-5.05 per unit for a tender floated by NTPC to buy 50 million standard cubic metre (mmscmd) of liquefied gas. The delivered price for this gas to power and fertiliser companies along the HBJ pipeline (the longest trunk pipeline connecting Hazira in Gujarat to Jagdishpur in Uttar Pradesh) would be around $6.22 per unit after including marketing and transportation charges. RIL, which has begun gas production from its Krishna Godavari basin and is selling to consumers on the east and west coasts, is selling gas at $4.20 per unit at the landfall point. But consumers like fertiliser companies on the HBJ pipeline end up paying $6.85 per unit after adding the marketing and transportation costs and levies. The picture is different for Andhra Pradesh consumers who are closer to the source of gas. AP users in would be paying a significantly lower price of around $5.2 per unit, a fertiliser firm official said.