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Reliance Industries Ltd (RIL) has sought tripling of its KG-D6 gas price from April 1, 2014 after the current below market rate of $4.205 per mmBtu expires.
RIL, on September 6, wrote to A Giridhar, Joint Secretary (Exploration) in the Ministry of Petroleum and Natural Gas proposing to price natural gas it produces from the Krishna Godavari basin block in Bay of Bengal at a rate equivalent to price India pays for importing liquefied natural gas (LNG).
The company wants to price KG-D6 gas at 12.67 per cent of Japan Customs-Cleared Crude (JCC), plus $ 0.26 per million British thermal unit. At $100 per barrel oil price, gas will cost $12.93 per mmBtu, sources with direct knowledge of the development said.
The formula proposed by RIL is the same at which Petronet LNG Ltd, the liquefied natural gas importer, buys 7.5 million tonnes per annum (30 million standard cubic metres per day) of LNG from RasGas of Qatar.
RasGas charges 12.67 per cent of JCC and Petronet, which is headed by Oil Secretary, pays a further $0.26 per mmBtu for shipping the gas in its liquid form (LNG) from Qatar.
RIL said it needs to “achieve financial closure in order to undertake further development activities in the block. Therefore, it is once again requested that approval of the Government to the price formula as proposed... be conveyed to us without further delay.”
The company said the price formula it has proposed would apply for all gas produced from KG—D6 block post March 2014.
Besides currently producing Dhirubhai—1 & 3 gas fields and MA oil field, the formula would also apply to D2, D6, D19 and D22 fields —— the field development plan of which has been approved by the government, it said.
The government had in 2007 fixed a price of $4.205 per mmBtu for gas from KG-D6 block for first five years of production. KG-D6 fields began production on April 1, 2009 and the current price expires on March 31, 2014.
From April 1, 2014, RIL wants the gas to be price at import parity as is done in case of crude oil.
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