Natural Gas Supply: Fertiliser Ministry Still A Priority Over Power

The government today decided not to divert natural gas from the politically sensitive fertiliser sector to the fuel starved power sector. This development can have long lasting repercussions in the oil and gas sector. The Empowered Group of Ministers (EGoM), under the leadership of Defence Minister A K Antony, has decided to fully protect the supply of gas to crucial agriculture-specific sector. This is seen as a cautious step by the government in an election year.

Although the EGoM has assured complete supply of natural gas to Urea manufacturing companies, it has asked the Fertiliser Ministry to reassess its demand of gas. In a meeting, the Fertiliser Ministry assured the EGoM of reviewing its demand and will consider sparing some gas for other sectors. At present, 32 million standard cubic meters per day (MMSCMD) of gas has been allocated to fertiliser companies whereas their total demand is more than 43 MMSCMD. The remaining gas requirement is usually fulfilled through imports.

The Petroleum Ministry has given 3 options to the EGoM for gas allocation. One, it has proposed to treat the fertiliser and power sector equally without any bias. Two, treating all the customers equally including LPG and city gas and lastly, to maintain the status quo of treating fertiliser sector as one up. 

If the government gives equal footing to the power and fertiliser sectors, then the power capacity of more than 2000 MW can go upstream. The EGoM is of the view that some solution should be reached regarding gas supply to power companies and they have therefore requested the Fertiliser Ministry to look into the matter. At the current level of production from the D6 field, only the fertiliser companies’ demand can be meet as production has come down to just 14.2 MMSCMD. At the same time, there were some deliberations about the import of fuel and other stock by fertiliser companies. The EGoM would soon meet again to solve the stalemate of gas for power companies.