Reliance Industries [Get Quote] will sell gas at $25.20 a barrel, equivalent to one-fifth of the current crude oil price of $135.

Chairman Mukesh Ambani, at the annual general meeting on Thursday, told shareholders that the gas from the Krishna-Godavari basin, off the country's eastern coast, would start flowing in the second half of the financial year.

The fuel from the KG basin will prune Rs 114,000 crore (Rs 1,140 billion) from the country's import bill. The price of $4.2 per million British thermal unit (mBtu) approved by the government for selling gas implies potential savings of about Rs 85,000 crore (Rs 850 billion) for consumers, said Ambani.

Ambani's statement on gas pricing comes even as the government is considering a revision of the floor price of $4.2 mBtu that was approved in September 2007.

The floor price is benchmarked against the crude price of $60 a barrel. When compared with the current crude price of $135 a barrel, the floor price is very low. According to industry analysts, the government fears that the price would reduce the value of its profit-share considerably.

About 80 installation vessels have been operating in the basin over the past five months to produce gas. About 90 per cent of the on-shore terminal facility and production infrastructure work has been completed. Gas from KG D6 reservoirs will be transported through the East-West pipeline system.

The company plans produce 80 million cubic meters of gas a day from the basin. Six additional deep-water rigs will be contracted for exploration very soon, said Ambani.

Along with targeting more acquisitions in the polyester space, RIL will try new initiatives in the alternative energy, rural retail and the overseas petroleum retail businesses. The company is working out biofuel and solar energy programmes as natural extensions of its conventional energy portfolio.

"Reliance Retail will create several rural business hubs for the organised retail initiative. These will be centres of aggregation for farm produce. It will engage in the supply of quality farm inputs and provision of products and services to rural consumers," said Ambani.

The company, which has closed down its fuel retail operations and asking for a level playing field to compete with public sector retailers, has begun retailing fuel in African countries, including Tanzania, Uganda and Kenya, through the recently acquired Gulf Africa Petroleum Corporation.

Completion of the second refinery in Jamnagar will increase processing capacity of the group to 1.24 million barrels per day, equivalent to about 2 per cent of global capacity. The refinery will be completed in the second half of this financial year, said Ambani.

In 2007-08, RIL made eight discoveries across major offshore basins in India.