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 April 1 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.
"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.
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The ministry guidelines state that it was imperative that NOCs are able to quickly monetise the output of their discoveries particularly marginal ones where 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."
Oil and Natural Gas Corp (ONGC) and Oil India Ltd (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 April 1 are for additional or new production from small/isolated fields, ONGC had in November last year used e-tendering to finalise a price of USD 10.10-11.20 per mmBtu for sale of gas from new marginal fields in Gujarat and Andhra Pradesh.
In case of Triputallu, Kaza, Mandapeta-23, Gokarnapuram and Suyyaraopeta marginal fields in Andhra Pradesh, the firm has finalised a price of USD 11.20 per mmBtu.