Oil ministry allows ONGC to sell gas from small fields through bids

New Delhi: Oil ministry has allowed national oil companies Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd to sell any new natural gas supplies from their small and isolated fields through an open tender.
While the BJP-led government had approved an international gas hub-based formula for all of the domestically produced natural gas in November last year, small and isolated fields were exempt. The oil ministry on 1 April issued amendment to the guidelines for pricing of gas from small and isolated fields by allowing producers to sell gas at market rates by inviting competitive bids from prospective consumers.
Companies will fix minimum price for their gas, which would be the prevailing government-determined rate, and ask interested buyers to offer more through bidding, officials said. Government had on 31 March announced $4.66 per million British thermal unit as the gas price for six-month period ending 30 September based on the approved formula.
“In case of new supplies, the price would be determined by NOCs (national oil companies) by calling bids through an open competitive bidding process,” the guideline said.
The ministry guidelines state that it was imperative that NOCs are able to quickly monetise the output of their discoveries particularly marginal ones where production is small and fields are isolated. The guidelines defined such fields as ones “whose peak production is less than 0.1 million standard cubic meters per day and they are situated more than 10 km away from the gas grid.”
Also, “fields whose peak production is less than 0.1 mmscmd and have a gas pressure which is less than the grid pressure” have also been defined as small/isolated fields.
ONGC and OIL have several such discoveries, which cumulatively produce around 3-4 mmscmd, enough to generate about 900 MW electricity. Officials said while the guidelines issued on 1 April are for additional or new production from small/isolated fields, ONGC had in November last year used e-tendering to finalise a price of $10.10-11.20 per mmBtu for sale of gas from new marginal fields in Gujarat and Andhra Pradesh.
ONGC has finalised a price of $10.10 per mmBtu for gas from Gamij-GGS-2 field and a rate of $11.10 per mmBtu for Gamij-GGS-3 field, both in Gujarat. For the Warosan-4 field in Mehsana basin of Gujarat, it has finalised a rate of $10.50 per mmBtu, they said. In case of Triputallu, Kaza, Mandapeta-23, Gokarnapuram and Suyyaraopeta marginal fields in Andhra Pradesh, the firm has finalised a price of $11.20 per mmBtu.
Source: Mint; 07 April 2015
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