ONGC looks to cash in on energy price

NEW DELHI: In a bid to capitalise on the global surge in energy prices, the Oil and Natural Gas Corporation (ONGC) has relaunched a tender to sell gas from its KG fields at a higher price of USD 15 per mmBtu (metric million British thermal units). 

As per the tender document, the company sought bids for the sale of 0.75 million standard cubic meters per day of gas for one year from the KG-DWN-98/2 (KG-D5) fields in the Bay of Bengal. 

It has asked the users to quote a premium they are willing to pay over and above the reserve gas price of 14 per cent of Brent crude oil price plus USD 1 per million British thermal units. The applicable sale price will be lower than the bid price or the government-dictated ceiling rate for gas produced from deep-sea fields, it said. The government fixes the price of domestically-produced natural gas twice a year - the rate for gas from deep sea fields for six months beginning April 1 is Rs 9.92 per mmBtu.

In April 2021, ONGC had sought bids for the sale of 2 mmscmd of gas from the KG-D5 block but had to abort it after the move was challenged in court. KG-D5 block is expected to have a peak production of 15.25 mmscmd (million Standard Cubic Meters of Gas per day) of gas and 80,000 barrels per day of oil. The company is likely to come up with another tender later this year for the sale of 5 mmscmd of gas from next year.

Looks for premium price

ONGC has asked the users to quote a premium they are willing to pay over and above the reserve gas price of 14 per cent of Brent crude oil price plus USD 1 per million British thermal unit.