Ravva field gas may be costlier, ONGC won't bear burden

Natural gas from the Ravva field may now become dearer for its users with the government set to allow the joint venture operating the field to increase its price by about 10-15 per cent.

Oil and Natural Gas Corporation (ONGC), which holds 40 per cent share in the field, has refused to bear the burden of any increase in the gas price.

The joint venture has proposed that the gas price be revised by 16.6 per cent to $3.30 per million British thermal unit from April 2002 onwards and by 10 per cent to $3.50, if it is from prospective effect. ONGC has been subsidising purchase of gas from private joint ventures which is sold at a price higher than the administered price.

Cairn Energy holds 22.5 per cent share in the Ravva fields in Andhra Pradesh. The other partners are the Videocon group-owned Petrocon, which holds 25 per cent, and Ravva Oil (Singapore) Pte, a subsidiary of Marubeni of Japan, which holds the remaining 12.5 per cent.

ONGC has informed the petroleum ministry that as a joint venture partner, it agrees with other partners about revision of gas price to reflect the present market conditions. "However, the applicability of such increase from retrospective effect should be considered by the ministry only if the price differential is not borne by ONGC for the past period."

ONGC subsidised purchase of gas from the joint venture fields to the extent of Rs 5,200 crore since October 1997 to June 2005. But, when the gas price was revised on July 1, the Centre had also decided that ONGC would no longer subsidise the higher priced joint venture gas.

Under the earlier mechanism, GAIL India bought gas from privately-operated fields to overcome shortage of gas from nominated fields, but to the end consumer it charged the administered price. The resulting loss to GAIL was made up by contribution from ONGC.

Ravva has two fields - Ravva main and Ravva satellite - producing 1.2 million standard cubic metre a day of gas. The revision is being sought for Ravva main which has a floor price of $1.75 and a ceiling price of $300.

The Ravva satellite price has a higher band of $2.30 and $3.30.