ONGC starts direct selling of natural gas to Steel Exchange

Petroleum ministry had allowed the company to sell gas directly and outside the administrative price mechanism

Upstream oil major ONGC Limited has started supplying gas under direct marketing from its isolated fields in the K-G Basin to Steel Exchange India Limited at the rate of 10,000 standard cubic metres per day (scmd). The fist of these fields at Vygreswaram in East Godavari district was put on production on Wednesday, a release stated.

The petroleum ministry had allowed the company to sell the gas directly and outside the administrative price mechanism (APM) to the consumers from the small and isolated assets that are away from the gas grid.  Whereas the natural gas supplied to the grid is being marketed by GAIL.

ONGC has already initiated direct marketing from similar small and isolated fields to consumers at Ahmedabad in Gujarat and Karaikal in Puducherry. It has around 15 such assets in the K-G Basin each having a potential ranging from 2,500 scmd to 30,000 scmd, according to a local spokesperson of the company.

Ceramic units and other local industries are queuing up to purchase these small quantities of natural gas offered by ONGC, he said. These assets reportedly comprise some of the exploratory as well as failed production wells.

Though the incremental revenues from these assets are very negligible for a company like ONGC,  the same is expected to become substantial once the price revision takes place next year, company officials said.