Gail, IGL get CBM gas from Reliance
Reliance Ind on Feb 2 had conducted an e-auction for sale of 0.90 mn standard cubic metres per day of gas it will produce from coal-bed methane (CBM) block
New Delhi: State-owned gas utility GAIL (India) Ltd and the nation’s largest city gas operator Indraprastha Gas Ltd (IGL) have walked away with most of the coal seam gas that Reliance Industries Ltd (RIL) auctioned, sources said.
Reliance earlier this month conducted an e-auction for sale of 0.90 million standard cubic metres per day of gas it will produce from coal-bed methane (CBM) block SP (West)-CBM-2001/1 in Madhya Pradesh. Users have been asked to quote a premium they are willing to pay over and above 12.67 per cent of the dated Brent crude oil price, according to a tender floated by the company.
The auction saw GAIL and IGL walk away with most of the gas, offering as much as $11 per million British thermal unit (mBtu) price, two sources with direct knowledge of the matter said. GAIL won 0.63 mmscmd of gas in the auction while IGL picked up 0.14 mmscmd, they said. In the auction, the gas price was set as higher of 12.67 per cent of dated Brent plus premium ‘V’; or the government-declared monthly price for conventional gas.
The government-mandated price for January is $7.85 per mmBtu. While Reliance had set the starting bid price of ‘V’ at $0.50 per mmBtu, bidders quoted $0.78 to walk away with the coal bed gas, they said. At the current Brent crude oil price of $80 per barrel, the gas price comes to $11 per mmBtu (12.67 per cent of $80 is $10.1 per mmBtu. Added to this is the bid value of ‘V’ of $0.78, which takes the gas price to $10.9 per mmBtu).
The e-auction happened on February 2. The gas supply in the contract is for 1 to 2 years beginning April 1. The pricing Reliance is seeking is modified from the March 2022 auction. In that auction, it had sought bids at a premium over the base of 13.2 per cent of Brent crude oil price. In March 2022, Reliance sold 0.65 mmscmd of CBM at $8.28 per mmBtu premium over the prevailing Brent crude oil price. Brent oil was trading above $115 per barrel at that time. It has now slipped to $78 a barrel. Last month, state-owned Oil and Natural Gas Corporation (ONGC) sought a premium over the government-dictated gas price of $7.82 per mmBtu for the gas it plans to produce from a CBM block in Jharkhand. ONGC sought bids from users for the sale of 0.05 mmscmd of gas from the North Karanpura coal-bed methane (CBM) block in Jharkhand for three years.
Users were asked to quote a premium they are willing to pay over and above the monthly domestic natural gas price that the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) notifies, the tender document showed.
