| "The decision of the EGoM will lead to a price of $4.20 per million British thermal units (mbtu) at delivery point. The approved price is 8.32 per cent lower than that proposed by contractors," the petroleum ministry said in a statement. |
| Approval of the formula, and the pricing, was critical for RIL, which had warned that delays could upset its gas production schedule. |
| The company is slated to start production of 40 million standard cubic metre per day (mscmd) of gas from the K-G basin by July 2008 and ramp it up to a peak production of 80 mscmd subsequently. This almost matches India's current production of gas and is expected to wipe out the demand-supply gap of gas in the country. |
| There is, however, a question mark on how much of this gas would be available to users, given the interim order of the Bombay High Court, which says that all of RIL's K-G basin gas is already locked up with Anil Ambani's Reliance Natural Resources Ltd (RNRL), NTPC and for captive use by RIL. |
| Reports of the approval triggered a 52-week high for the RIL stock, which touched Rs 2,022 at the Bombay Stock Exchange today. Its shares closed 1.34 per cent up at Rs 2,012.95. "RIL was ready for a few cents knock-off on the gas price anyway. The end of uncertainity on pricing is a big positive," an analyst said. |
| The EGoM, headed by External Affairs Minister Pranab Mukherjee, managed a reduction in price by sticking to dollar pricing for the K-G gas (instead of rupee pricing) and capping the price of crude in the variable portion of the formula at $60 per barrel, instead of $65 proposed by RIL and its partner, Niko Resources Ltd. |
| "We welcome the EGoM recommendations. We are now focused on ensuring timely execution of this pioneering deep- water facility in India," said an RIL official. |
Top Section
Explore Business Standard