Yadav recently wrote to Prime Minister seeking allocation of coal-bed methane (CBM) gas from RIL's Sohagpur blocks in Madhya Pradesh, sources privy to the development said.
RIL is expected to start production of gas from below coal seams, called CBM, in the second quarter of 2015.
The sources said Indian Farmers Fertiliser Co-operative Ltd (IFFCO) plans to set up an ammonia-urea project adjacent to its Phurpur fertilizer unit. The plant will use the gas as feedstock to manufacture 1.5-2 million tonne urea a year.
Yadav has stated that since CBM gas is cheaper than the imported fuel, setting up of Ammonia-Urea expansion project of IFFCO on RIL gas will increase agricultural production and reduce subsidy burden of the government.
As per the pricing formula approved by the government, all gas - both conventional and non-conventional fuel like CBM will cost about $8 per million British thermal unit from April. This compares to $13-14 price of imported fuel.
He also stated that Reliance Gas Pipeline Ltd, a unit of RIL, has got license to lay a pipeline from Shahdol in Madhya Pradesh to Phulpur, so transporting the fuel will not be a difficulty, they said.
RIL in January had stated that it is targeting first gas from Sohagpur CBM blocks in 2015-16 fiscal.
It plans to produce 3.5 million standard cubic meters per day of gas from the two Sohagpur blocks.
RIL holds 3 CBM blocks -- Sohagpur (East) and Sohagpur (West) in Madhya Pradesh and Sonhat in Chattisgarh. RIL has drilled over 40 crore holes on the 500 sq km Sohagpur West and 495 sq km Sohagpur East blocks and tested for gas content.
Reliance Gas Pipelines Ltd will lay a 312-km pipeline to transport coal gas (CBM) produced from Shahdol in Madhya Pradesh to Phulpur near Allahabad in Uttar Pradesh.
The pipeline will have a capacity to transport 4.3 mmscmd of gas, including 0.875 mmscmd capacity that will be available for any third party for open access on non-discriminatory basis.
The pipeline will travel from Shahdol to JaysingNagar- Beohari-Gurh and culminate at Phulpur.
At Phulpur, the pipeline may be hooked into state-owned gas utility GAIL India Ltd's main Hazira-Vijaypur-Jagdishpur trunk gas pipeline. Connection with HVJ would enable gas to flow to any consumer.