India’s dependence on imported energy will come down by the end of this year as Reliance Industries starts producing natural gas from its KG-D6 block. In times of high energy costs, the price of $4.2 per million British thermal units (mmbtu) will be music to the ears of consumers. This roughly translates to an equivalent price of $25.2 per barrel of crude oil, Mukesh Ambani told shareholders here on Thursday, a fraction of the international price of crude oil, which is at $135 per barrel.
Till a few years ago, natural gas was far cheaper than crude because of plentiful supply and the fact that it could only be sold where there was a pipeline network. However, the recent years have seen natural gas prices rising in tandem with oil.
Currently, the spot market price of liquefied natural gas (LNG) is close to $19-20/mmbtu, which is equivalent to $120 per barrel of crude oil. The biggest beneficiaries of the low-cost energy will be natural gas-based power plants and fertiliser plants where gas is a feedstock.
Retail consumers will also have the option of converting their vehicles to cheaper and environmentally less damaging natural gas. A large gas pipeline network being laid by an associate company of RIL will allow gas to be transported from the offshore gas fields to consumers.
Apart from the east-west pipeline, Reliance is also commissioning other major projects during the current fiscal. This includes an oil refinery of 29 million tonnes per annum (mtpa) capacity being commissioned at Jamnagar, next to RIL’s existing 33 mtpa capacity facility. The two refineries together will be the largest such facility globally. These will also give Reliance a large supply of petroleum products, diesel and petrol amongst them.