ONGC topline to get Rs 1,000cr booster

ONGC's revenues will increase by about Rs 1000 crore from this fiscal after it began direct marketing of natural gas produced from  Panna/Mukta and Tapti (PMT) fields in western offshore from April 1, top company officials said.

ONGC and its partners Reliance Industries and BG Group of UK will sell 4.8 metric million standard cubic meters per day (MMSCMD) of gas directly at $4.08 per million british thermal unit (MBTU) and the remaining 6 MMSCMD will be sold to Gail at $3.86 per MBTU for supply to existing fertiliser and power plants on the HBJ pipeline.

Prior to this, gas was being sold to Gail as government nominee at $3.11 per MBTU.

The price increase will result in additional revenue of $120 million for the joint venture.

"ONGC topline will improve by Rs 1,000 crore per year. Till March 31, 2005, it had to make good the difference between the JV gas price of $3.11 per MBTU and consumer price of Rs 2,850 per thousand cubic meters. The subsidy borne by ONGC was Rs 750 crore a year," the officials said.

With direct marketing of gas and withdrawal of subsidy, ONGC will gain additional revenue of Rs 200-250 crore per annum on account of higher gas price, besides savings of about Rs 750 crore towards subsidy.

The official said ONGC-RIL-BG will sell 1 MMSCMD of gas to Gujarat State Petroleum Corp, 0.7 MMSCMD to Gujarat Gas Corp, 1.3 MMSCMD to IPCL and 1.80 MMSCMD to Reliance Industries, Hazira.

The production of gas from Tapti and Panna/Mukta fields began in June 1997 and February 1998, respectively.

The officials said as per the production sharing contract (PSC) for the fields, the ceiling price for gas payable by Gail to JV partners could be increased on completion of 7 years of first production.

The price revision of Tapti gas became due in June 2004 and Panna gas in Feb 2005, the official said. Accordingly, the ceiling price of gas was increased to $5.11 per MBTU but Gail did not accept the revised price.

Petroleum ministry, on March 29, put a price tag of $3.86 per MBTU on 6 MMSCMD gas Gail would take from the fields for supply to power and fertilizer units. "The price arrived at was equivalent to the price of regassified LNG."

"We were permitted to market the balance 4.8 MMSCMD gas at a price which is not lower than the price paid by Gail ($3.86 per MBTU)," the officals said.