Gail offers $3.86 per mBtu for gas

Gail (India) has offered to pay British Gas (BG), Reliance Industries (RIL) and ONGC a 24% higher price for the gas they produce at Panna/Mukta and Tapti offshore fields.

The BG-RIL-ONGC consortium has been demanding a higher price from Gail, which currently buys 10.8 million cubic metres per day of gas at a capped price of $3.11 per million British thermal unit (mBtu).

"We are willing to pay a price at which liquefied natural gas (LNG) is marketed from Petronet LNG's Dahej terminal," a Gail official said.

LNG from Dahej is sold at a price of $3.52 per mBtu on Gross Clarofic Value (GCS) terms or $3.86 per mBtu on Net Clarofic Value (NCV). Gail has offered to pay BG-RIL-ONGC $3.86 per mBtu for gas from PMT fields.

Gail is likely to charge 10 cents per mBtu as marketing margin and another 38 cents as pipeline transportation charge.

"Customers cannot afford anything beyond this," the official said.  

The price Gail has offered is lower than the $4.53 dollars per mBtu the Canadian Niko Resources charges for 3.5 mmcmd of gas it produces at Hazira.

BG-RIL-ONGC had previously stated that Gujarat State Petroleum Corporation (GSPC) had approached them to buy the entire PMT produce at 'market price'.

BG-RIL-ONGC had said that they planned to sell only six mmcmd of gas produced at Panna/Mukta and Tapti to GAIL at 'market price' so as to continue feedstock supplies to power and fertiliser units, as desired by the Petroleum Ministry.

Currently, GAIL buys 10.8 mmcmd of gas produced at the fields and retails it to consumers, mostly power and fertiliser plants. The gas price is capped at 3.11 dollars per mBtu but now the consortium partners want this cap to be raised to 5.6 dollars per mBtu.

The petroleum ministry had agreed with the BG-RIL-ONGC demand for raising the price cap, officials said.