New Delhi: The country’s biggest oil company Indian Oil Corporation (IOC) walked away with half of the natural gas offered by Reliance Industries Ltd and its UK partner BP in the latest auction of the fuel used to generate power, make fertilizers . Used in CNG and for cooking purposes. Sources with knowledge of the matter said that IOC got 2.5 million standard cubic meters per day of the 5 mmscmd gas auctioned last month.
The oil refining and marketing company, which was also the top bidder in the last auction of gas from Reliance-BP’s eastern offshore KG-D6 block, bid 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 have committed to convert a total of 0.5 mmscmd gas into CNG for sale in domestic kitchens for automobiles and cooking purposes. Secured.
He said state gas utility GAIL and refiner Hindustan Petroleum Corporation Ltd (HPCL) got 0.6 mmscmd, while Gujarat State Petroleum Corp (GSPC) got 0.5 mmscmd and Shell 0.2 mmscmd. Reliance-BP, which reversed the declining trend in domestic gas production two years ago by starting production of its second wave of discoveries in the deep-sea KG-D6 block in the Bay of Bengal, is now ramping up supplies.
Natural gas, a clean-burning, efficient fuel, is being viewed as a transition fuel for nations to move from polluting hydrocarbons to zero-emission fuels. Reliance-BP offered 5 MMSCMD gas for a period of 3 years starting June 1 in the latest tender. Bidders were asked to quote a variable ‘V’ over and above the spot market benchmark JKM price for Liquefied Natural Gas (LNG). Delivered to Japan and South Korea.
Sources said the e-auction began on May 19 and ended on May 23 – the longest period of auction since 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) USD 0.75 per mmBtu for 3 years, he said, adding that the current price of JKM is $9.2 per mmBtu, the price of KG -D6 gas. Comes to around USD 10.
This rate compares with the capped price of US$6.5 per mmBtu charged by Oil and Natural Gas Corporation (ONGC), the state-owned behemoth, for fuel produced from legacy or old fields. Reliance-BP sold 6 MMSCMD gas in April. IOC had walked away with almost half of the 6 mmscmd gas sold in the e-auction on April 12, while GAIL had 0.7 mmscmd, Adani-Total Gas Ltd 0.4 mmscmd, Shell 0.5 mmscmd, GSPC 0.25 mmscmd and IGS 0.5 mmscmd. Purchased.
Sources said that even in that auction, the final bid price came at a premium of $0.75 per mmBtu over the JKM price (JKM + USD 0.75 per mmBtu). But bidders will only have to pay a ceiling or maximum price to be fixed bi-annually by the government for gas produced from difficult fields such as deep sea and high-temperature, high-pressure (HTHP). The ceiling price for April to September is $12.12 per mmBtu.
The gas produced from wells drilled beneath the seabed is used to produce electricity, make fertilizers, or convert to CNG to power automobiles or for cooking, as well as piped into domestic kitchens in industries. In May last year, Reliance-BP auctioned 5.5 mmscmd of incremental gas from new discoveries in the KG-D6 block, benchmarking it to the same JKM gas marker.
The discovered price in that e-auction came at a USD 0.06 discount to the JKM (Japan-Korea Marker) LNG price. Earlier, both had sold 7.5 mmscmd of gas to JKM at a discount of $0.18 per mmBtu.
Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 – the largest in the lot – were brought into production in April 2009, and MA, the only oilfield in the block, was brought into production in September 2008. While the MA area was turned off. Commenced in September 2018, production from D-1 and D-3 ceased in February 2020.
Since then, Reliance-BP has been investing USD 5 billion to produce three deepwater gas projects in block KG-D6 – R-cluster, satellite cluster, and MJ – which together meet about 15 per cent of India’s gas. expected to do. demand till 2023