Reports indicate that the union petroleum ministry received a request from Gujarat State Petroleum Corp (GSPC) to allow the latter to price the natural gas from its Deen Dayal West (DDW) gas field in block KG-OSN-2001/3 on par with imported LNG.
According to the request submitted recently, the Gujarat government-owned firm wants the oil ministry to allow it to price its 5.24 million standard cubic meter per day of peak output from the KG basin field at $14.2 per million British thermal unit.
The company has reportedly computed the price based on an arms length price discovery exercise it carried out under the supervision of a neutral third party auditor.
GSPC had on February 25 asked bidders to quote a positive or a negative number to be added to India’s liquefied natural gas (LNG) import formula of 12.67 per cent of Brent crude oil plus $0.26 per mmBtu.
GSPC prescribed a minimum sale price of $8.50 per mmBtu, at floor rate of $65 per barrel of oil. The company has reportedly received 53 bids from 37 companies for about 75 mmscmd.
GSPC has reportedly found that demand was in excess of the supply when the biddable variable was kept at zero. At cap oil price of $110 per barrel, the gas price translates into $14.2 per mmBtu.
Reliance Industries is also learnt to have used the same formula for seeking bids to price gas from its Sohagpur coal-bed methane (CBM) block in Madhya Pradesh.
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