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Short of LPG, govt won't let RIL export yet

Govt has initiated talks with RIL to ensure that LPG from its refineries at Jamnagar continues to be sold in domestic market only.

, ET Bureau|
Sep 13, 2008, 04.51 AM IST
NEW DELHI: Alarmed at the impending shortage of cooking gas, the government has initiated talks with Reliance Industries to ensure that LPG from its refineries at Jamnagar, including the greeenfield Reliance Petroleum unit, continues to be sold in the domestic market only.

This is because RIL had given a commitment to sell LPG domestically about two years ago and that informal agreement is now coming to an end.

As a sweetener, the government is now offering the company deemed export status for cooking gas sales in the domestic market, which is facing a shortfall of 5 million metric tonnes per annum (MMTPA).

Moreover, to make matters worse for the government, the cooking gas shortage has cropped up just before the festive season that also coincides with the run-up to the general elections.

Talks are on with RIL to resume supplies of 2.49 MMTPA LPG from its existing Jamnagar export-oriented unit (EoU) refinery. The company has been asked to supply LPG from RPL���s SEZ refinery, which is slated to begin production by the year-end , as well.

The government is depending on the SEZ refinery to partially meet the shortfall to offset the import burden on PSU oil companies like IOC.

Even if RIL supplies about 2.5 MMTPA from its EoU refinery, the PSUs would have to import 3.74 MMTPA of LPG, which would be almost equal to their total production. The projected demand of LPG is about 13 MMTPA.

���RIL had approached the petroleum ministry on several occasions in the recent past seeking permission to export LPG (from its existing EoU refinery).

However, the ministry did not grant permission. The chances of such a permission coming in the near future appear remote. Thus, the LPG from RPL���s SEZ refinery will help reduce the shortfall,��� an official source said.

IOC had warned that the country���s LPG import requirements would jump from 2.8 MMTPA to about 5 MMTPA from 2009.
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