The steel producers challenged Reliance"s decision to cut supplies to sponge iron producers and petrochemicals plants and refineries, to meet the demands of core producers in the power and fertilizer industry.
"...The fact that production from KG-D6 fields is presently below expectation, the supply of non-core sector on whom cut has been imposed cannot be restored at the cost of the core sector," the ministry said in a order dated May 18. "Ministry of Petroleum and Natural Gas is competent to take decision on gas supply within the Gas Utilisation Policy laid down by Empowered Group of Ministers (EGoM)," it further added.
"If there is a shortfall in meeting the firm demand of the remaining sectors, pro rata cuts should be imposed on them. It is also made it clear that if production from KG-D6 fields increase, then the supply to various non core customers would also increase. So supply is fully dependent on production," the order stated.
The current production from the KG-D6 is less than 45 million standard cubic metres per day (mmscmd) whereas the contract to supply the core industries is around 47.5 mmscmd. The ministry said that first the demand of the core industry would be met and the excess, if any, would be allocated to non-core users of natural gas. Reliance is currently facing problems of lower production in the field and has planned to come up with an optimal solution as soon as possible with the help of UK"s BP.