Reliance Industries Ltd (RIL) has demanded that the price of KG-D6 gas be trebled to roughly $13 per million British thermal unit (mBtu) from $4.20.
Last week, Canada-based Niko Resources — RIL’s 10 per cent partner in the oil and gas block — had indicated that the government had started talks on a price of $8 per mBtu for the intervening period.
RIL has suggested a new pricing formula for the country’s only deepwater gas basin that is indexed to the Japan customs-cleared crude, which, sources claim, is the predominant benchmark price in Asia.
The $13-per-mBtu price is also on a par with that apparently fixed for the gas expected to flow from the proposed cross-country Turkmenistan-Afghanistan Pakistan-India (Tapi) pipeline.
In a letter to the oil ministry, RIL said, “As of today, the price of crude has been consistently hovering around $100 per barrel and LNG under long-term contract was being imported at $10 per mBtu. GAIL, with the approval of the government, has recently concluded the Tapi GSPA in which the price formula, as reported by the media, leads to a landed gas price of nearly $13 mBtu at Fazilka at current crude prices.”
RIL reiterated that the formula approved in 2007 was far removed from the present market realities. The old formula had capped the price of crude at $60 a barrel. The company has asked the government to review the formula at the earliest.
In January, the management committee for the KG-D6 gas basin, which comprises two representatives from the Centre and two from RIL, had approved an optimised field development plan for four new discoveries: D2, D6, D19 and D22. Gas output from these discoveries is expected to commence after March 2014.
RIL said without adequate clarity on pricing, “it would not be possible to tie up funding or hope to achieve financial closure for the projects to develop these discoveries”.
Last week, Canada-based Niko Resources — RIL’s 10 per cent partner in the oil and gas block — had indicated that the government had started talks on a price of $8 per mBtu for the intervening period.
RIL has suggested a new pricing formula for the country’s only deepwater gas basin that is indexed to the Japan customs-cleared crude, which, sources claim, is the predominant benchmark price in Asia.
The $13-per-mBtu price is also on a par with that apparently fixed for the gas expected to flow from the proposed cross-country Turkmenistan-Afghanistan Pakistan-India (Tapi) pipeline.
In a letter to the oil ministry, RIL said, “As of today, the price of crude has been consistently hovering around $100 per barrel and LNG under long-term contract was being imported at $10 per mBtu. GAIL, with the approval of the government, has recently concluded the Tapi GSPA in which the price formula, as reported by the media, leads to a landed gas price of nearly $13 mBtu at Fazilka at current crude prices.”
RIL reiterated that the formula approved in 2007 was far removed from the present market realities. The old formula had capped the price of crude at $60 a barrel. The company has asked the government to review the formula at the earliest.
In January, the management committee for the KG-D6 gas basin, which comprises two representatives from the Centre and two from RIL, had approved an optimised field development plan for four new discoveries: D2, D6, D19 and D22. Gas output from these discoveries is expected to commence after March 2014.
RIL said without adequate clarity on pricing, “it would not be possible to tie up funding or hope to achieve financial closure for the projects to develop these discoveries”.
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