Country-owned Oil and natural gas organisation (ONGC) has agreed to put off charging customers a marketing margin on the fuel it plans to produce from its KG basin area but refused to lower the minimal price, in line with soft files.
ONGC, India’s top oil and gas manufacturer, last month sought bids for sale of initial 2 million wellknown cubic meters consistent with day of gasoline from its KG-DWN-ninety eight/2 block (KG-D5).
The organisation requested bidders to cite a rate connected to triumphing Brent crude oil fees. It constant the ground or minimal price at 10.Five in step with cent of the 3-month average Brent crude oil price. On pinnacle of it, the firm sought USD 0.20 according to million British thermal unit.
Capability bidders but opposed the levy of the advertising and marketing margin as well as the “high” ground rate.
Responding to queries raised by way of bidders, ONGC said the ground charge cannot be modified but advertising margin is being dropped.
“change in Reserve gasoline fee (floor price) isn’t always agreed. However, thinking about requests from diverse bidders, the levy of advertising margin of USD 0.20 in keeping with mmBtu over and above contract price is eliminated,” it stated.
At the cutting-edge Brent crude oil price of near USD 70, the minimal price comes to USD 7.Three in keeping with million British thermal unit.
This charge, but, might be concern to the ceiling or cap constant with the aid of the authorities for deepsea fields every six months. The cap for six months starting April 1 is USD three.62 in line with mmBtu.
This essentially approach that bidders may also nook fuel via supplying to pay USD 7, however the shoppers will must pay no greater than the ceiling price of USD three.62.
ONGC within the gentle provided to promote 2 mmscmd of gasoline for a period of 3 to 5 years at Odalarevu in East Godavari district of Andhra Pradesh, that’s connected to kingdom gasoline software GAIL’s KG basin pipeline community in addition to PIL’s East West Pipeline that’s related to KG basin network and further to Gujarat gas grid.
“Bidder is needed to quote ‘P’, which will be the slope to Dated Brent fee. This slope should be greater than or identical to 10.Five in step with cent,” the smooth file stated adding that ‘P’ can be made inside the increment of 0.1 in keeping with cent.”
Gasoline charge (in USD in step with mmBtu) “will be the lower of the quoted slope (according to cent) * Dated Brent price or notified ceiling charge in the course of the period,” it stated.
The auction is to be carried out next week.
In pre-bid meetings, bidders raised the difficulty of excessive reserve rate.
Bid costs starting from 10.5 in step with cent of dated Brent fee should be revised downwards so as to account for inexpensive alternatives to be had from other LNG terminals, consistent with a bidder question published on the ONGC smooth file.
Another bidder stated, “concerning the pricing system, it’s miles of our view that the starting slope to dated Brent charge at 10.5 consistent with cent is quite a higher side. Crude oil demand goes to recover this yr and it is going to increase in brief. In different domestic fuel tenders from KG-D6 (2 years lower back) became additionally linkage with brend however the slope become very low ie eight.Five according to cent.”
“also our gasoline consumption points are in western and northern a part of India and the place of the fuel field on jap side also provides up transportation value of multiple transporters. Considering the above elements, we request for a reduction in slope.”
But some other bidder said, in view of effects of the latest domestic auctions, and similarly in consideration of the better transportation charges in evacuating fuel to west and north India, request is that the reserve fuel fee be modified to nine.5 in keeping with cent of Dated Brent fee.
“within the modern-day global/local fuel market scenarios with advanced market priced domestic fuel availability, spot LNG with infinite flexibilities matching particular requirements of clients, uncertainty of demand and affordability of small scale production area, proposed Reserve gasoline price of 10.Five in line with cent isn’t reflective of modern marketplace truth,” every other bidder stated.
“also, within the instant case, considering advertising margin of USD zero.20 according to mmBtu on GCV foundation plus ₹16.14 transportation tariff of KG basin pipeline community as much as PIL interconnect point, the Reserve fuel charge works out to be extra than eleven according to cent. In view of above, ONGC is asked to remember pragmatic gasoline reserve gas charge of eight.5 in step with cent offering win-win proposition to ONGC and prospective bidders,” the bidder introduced.
Within the bid document, ONGC stated the marketing margin became to cowl the fee of marketing and it does now not shape a part of the ceiling gasoline charge.
Gasoline resources from the block, which sits next to Reliance Industries Ltd’s KG-D6 block in Bay of Bengal, is to start from cease-June.
In advance this month, Reliance Industries Ltd and its accomplice BP p.C of united kingdom bought five.5 mmscmd of additional herbal gasoline from KG-D6 at a charge linked to Platts JKM (Japan Korea marker) – the liquefied natural gas (LNG) benchmark rate evaluation for spot bodily cargoes.
The bottom bid that may be placed is JKM minus USD 0.3 according to million British thermal unit. The very best perfect bid could be JKM plus USD 2.01 consistent with mmBtu.
That is the identical benchmark RIL-BP had utilized in February to promote out 7.Five mmscmd of gasoline from the block.
ONGC’s KG-DWN-ninety eight/2 or KG-D5 block is anticipated to have a height manufacturing charge of 15.25 mmscmd of herbal gas and 80,000 barrels in line with day of oil.
The business enterprise is probably to come out with another smooth later this year for the sale of 5 mmscmd of fuel from next year.
This Article was First Published in Daily News Junction