New Delhi: The state-owned oil and natural gas industry (ONGC) on Monday bid for the sale of initial 2 million standard cubic meters per day of gas from its KG basin at a minimum price of 6.6 USD per mmBtu.
According to the tender document, ONGC intends to sell natural gas from its KG-DWN-98/2 block, which sits next to the Reliance Industries Ltd (RIL) -PP Plc industry KG-D6 fields, from the end of June. start.
Initially, 2 million standard cubic meters per day were offered for sale through an e-auction.
ONGC searched for bid indexed on Brent crude oil. At least 10.5 percent of the three-month average Brent crude oil price was charged.
At the current Brent crude oil price of $ 63, the minimum price is $ 6.6 per million British thermal units.
However, this price is subject to the ceiling or limit set by the government every six months for deep-sea fields. The cap for six months from 1 April is USD 3.62 per mmBtu.
This essentially means that bidders may buy gas by bidding $ 7, but buyers do not have to pay more than the $ 3.62 ceiling price.
A senior ONGC official said the ceiling price is expected to rise to $ 5.5-5.6 during the next review, which takes place on October 1st.
“The current ceiling price is one third less than the minimum production cost of a deep-sea field. “After including the cost as well as the margin, the gas price should be 6 USD and not 3.62 USD,” he said.
Earlier this month, Reliance Industries Ltd and its partner BP Plc from the UK solicited a bid for the sale of 5.5 mmscmd of additional natural gas that will be available from their eastern KG-D6 block abroad.
According to the tender document, the e-auction will take place for April 23 and the supply of gas will start from the end of April or early May.
Bidders must submit a price linked to Platts JKM (Japan-Korea) – the standard pricing of liquefied natural gas (LNG) for physical loads.
The lowest bid that can be offered is JKM minus USD 0.3 per million UK thermal unit. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu.
This is the same benchmark that RIL-BP used in February to sell out 7.5 mmscmd of gas from the block.
At the current price, the lowest price for the 5.5 mmscmd gas auctioned by RIL-BP is almost USD 6.5 per mmBtu.
But just like ONGC, RIL-BP is also entitled to a maximum of USD 3.62 per mmBtu ceiling set by the government for a period of six months to 30 September.
The KG-DWN-98/2 or KG-D5 block from ONGC is expected to have a peak production rate of 15.25 mmscmd of natural gas and 80,000 barrels of oil per day.
The company is likely to issue another tender later next year for the sale of 5 mmscmd of gas from next year.
Source: Telangana Today