State-run Oil & Natural Gas Corporation (ONGC) is ready to begin natural gas production from a new field off the Mumbai coast but is awaiting government nod for the price at which it will sell the fuel.
"The C-Series fields are ready for commissioning but we have delayed production pending government approval for the price at which the gas will be sold to (state gas utility) GAIL India," a company official said.
ONGC has invested Rs 1,790.70 crore in fields that would give an additional gas production of 3 million standard cubic metres per day (mmscmd).
GAIL had earlier contracted to buy the entire output from C-Series fields at $5.5 per million British thermal unit, 30 per cent more than the rates fixed for Reliance Industries' eastern offshore KG-D6 fields.
The official said the Petroleum Ministry had sought details of how the price of the gas was arrived at and the provisions relating to pricing of the gas in the Production Sharing Contract (PSC) for the fields.
"We have provided all relevant details and are awaiting their go ahead (to being production)," the official said. "Currently, we are just doing test productions."
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Cumulative production from the project is envisaged at 15.14 billion cubic meters of gas and 6.13 million tons of condensate in 15 years.
GAIL was to begin buying gas from C-series fields from August 1 but the plans have been delayed because of the pending government approval to the price.
The field would begin with 0.8 mmscmd output that would rise to 3 mmscmd in a years time, the official said.
Four well platforms on the C-series fields are ready for commissioning and 192-km pipeline to carry the gas to the shore is also ready. The pipeline network will connect eight platforms and 22 wells to a process complex and thereafter to the Uran processing plant near Mumbai.
Reliance gets $4.205 per mmBtu for the gas it produces from KG-D6 fields off the Andhra coast. The price is fixed for the first five years of production. KG-D6 gas production began on April 2 and is slated to rise to 80 mmscmd by year-end, nearly doubling the nation's gas output.
A GAIL official said according to the production profile given by ONGC, the peak output of 2.8 mmscmd from C-series will last 5-6 years.
The price for C-series fields is similar to what GAIL pays for gas from the western offshore Panna/Mukta and Tapti or PMT, fields that are jointly owned by British Gas, Reliance and ONGC. GAIL pays pay $5.7 per mmBtu for PMT gas, compared with $4.3 per mmBtu for Cairn India-operated Ravva field off the east coast.
None of the prices include transmission charges, marketing margins or local levies on gas sales.
ONGC sells a large chunk of its gas at the government-controlled price of about $1.8 per mmBtu.
The oil major has invested Rs 3,195 crore to develop the C-series marginal field that is estimated to hold in-place reserves. Of this, Rs 1,790.70 crore have gone into a new four well platform and 192-km pipeline system.
The C-series field, was discovered in 1990s and is about 60 km west of Daman in the Tapti-Daman block offshore Mumbai at water depths ranging from 19 meters to 35 metres, but considered marginal until crude crossed the $100 a barrel mark last year.