IOC bags lion’s share in RIL’s KG gas sale

New Delhi Indian Oil Corporation (IOC), the nation’s largest oil firm, has walked away with half of the natural gas that Reliance Industries Ltd (RIL) and its partner bp of the UK offered in the latest auction of the fuel used to generate power, produce fertilizer, turned into CNG and used for cooking purposes.

IOC got 2.5 million metric standard cubic meters per day out of the 5 mmscmd of gas auctioned last month, sources with knowledge of the matter said. The oil refining and marketing company, which was the top bidder even in the previous auction of gas from the eastern offshore KG-D6 block of Reliance-bp, bid the volumes on behalf of seven fertilizer plants. City gas companies including GAIL Gas Ltd, Mahanagar Gas Ltd, Torrent Gas, Indian Oil Adani Gas Ltd, and Haryana City Gas secured a total of 0.5 mmscmd of gas for turning into CNG for sale to automobiles and piped to household kitchens for cooking purposes.

State gas utility GAIL and refiner Hindustan Petroleum Corporation Ltd (HPCL) got 0.6 mmscmd each while Gujarat State Petroleum Corp (GSPC) walked away with 0.5 mmscmd and Shell another 0.2 mmscmd, they said. Reliance-bp, which two years back reversed the declining trend in domestic gas output by bringing to production their second wave of discoveries in the KG-D6 block lying in deep sea of the Bay of Bengal, are now ramping up supplies. Natural gas, a cleaner-burning, efficient fuel, is being seen as a transition fuel for nations to move from polluting hydrocarbons to zero-emission fuels. Reliance-bp in the latest tender offered 5 mmscmd of gas for a period of 3 years starting June 1.

Bidders were asked to quote a variable 'v' over and above the JKM price, the spot market benchmark for liquefied natural gas (LNG) delivered to Japan and South Korea. Sources said the e-auction started on May 19 and ended on May 23 - the longest duration of an auction since the time operators were allowed to sell fuel through open tender.

At the end of the e-auction, gas was sold to 16 buyers at a price of JKM + (plus) $0.75 per mmBtu for 3 years, they said adding at the current JKM price of $9.2 per mmBtu, the price for KG-D6 gas comes to around $10.