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Jaipal Briefs EGOM on KG Basin Shortfall

  • The Empowered Group of Ministers (EGoM) discussed the shortfall in the Krishna-Godavari (KG) Basin, which is leading to demands for higher gas prices. No decision has been taken yet, as the discussion remained inconclusive.Union Petroleum Minister S Jaipal Reddy briefed the EGoM on the issue. Suddenly, there has been a steep fall in the production in the KG Basin. It has affected even the production of fertilizers.According to sources, at a time when India is struggling for energy security, few corporate are trying to arm-twist the Government for their personal gains.Fall in gas production in Krishna Godavari (KG) Basin block is also being linked to higher prices for the gas.

  • As soon as government revises the price – due sometime in 2012 – gas production could go up. At the EGoM meeting was apprised of the ground situation. The contractors cite geological reasons for the shortfall in the production. However, the view taken was that only technical experts can confirm or deny it and present an objective view.Gas production as approved by Field Development Plan is 80 MMSCD. However, the RIL is producing only 63 per cent of the production, according to the official data. The issue has a serious bearing on the viability of steel, fertilizers, power and other Small and Medium Enterprises (SMEs).

  • First, the company is not able to supply desired quantity of gas to these sectors. Second, international prices of gas are very high and increases country’s dependence on imports like in crude oil. Third there is no clarity on when the quantity of gas supply will increase.Union Petroleum Minister S Jaipal Reddy, in his presentation, is understood to have pointed out that 75 per cent of the oil requirement is imported and with the mounting losses of oil companies, which is in the region of 1 lakh, 45,000 crore, there is an insistent and imperative need to raise the domestic gas production, in order to reduce the nation’s dependence on imported crude oil.In this connection, Jaipal Reddy expressed optimism of an early decision on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, as there is considerable consensus among all the countries and it could result in an early decision.

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