The Rangarajan committee has been asked by the oil ministry to resolve the protracted coal-bed methane (CBM) pricing issue that could further delay commercial production of gas from blocks held by Essar Oil and Reliance Industries, government and industry officials said.
The Panel is scheduled to meet latter half of October to examine pricing matters of domestically produced gas, including CBM. So far the committee had limited its focus on issues related to oil and gas blocks auctioned under new exploration licensing policy.
The Ministry wants suggestions of committee of secretaries (CoS) or the expert panel before taking the sensitive pricing matter to the cabinet for approval. The Prime Minister’s Office has also been requested by the oil ministry to intervene so that CoS would take up the CBM pricing issue. The oil ministry, RIL and Essar did not respond to any queries regarding the matter.
The CBM pricing issue has been referred to the Rangarajan panel as the oil ministry is in a fix because of big gap between gas prices derived by Reliance and Essar, officials said. Essar has discovered CBM price at $4.20/unit while Reliance’s market price is about $13/unit.
“It is not unusual that CBM prices have regional variations, depending on its proximity to consumers. CBM quantities are relatively small compared to natural gas produced from blocks such as Reliance-operated KG-D6,” a government official said requesting anonymity.
Once the pricing issue is solved, Essar’s Raniganj block and Reliance’s Madhya Pradesh CBM fields could start commercial production within a year of pricing approval, industry officials said. The three blocks are expected to produce about 5-6 million standard cubic metres per day.
RIL and Essar have been waiting for more than a year to get their gas prices approved but officials expect more delay as the Rangarajan panel could require one more extension before it would submit its recommendations.
Reliance first attempted in October 2011 to discover CBM price of its two blocks in Madhya Pradesh, but abandoned it after some tacit objection by the oil ministry. It made another attempt in February by inviting price bids from over 70 consumers that discovered $13 per unit price at an average benchmark crude oil rate of $100 per barrel, officials said.
The Panel is scheduled to meet latter half of October to examine pricing matters of domestically produced gas, including CBM. So far the committee had limited its focus on issues related to oil and gas blocks auctioned under new exploration licensing policy.
The Ministry wants suggestions of committee of secretaries (CoS) or the expert panel before taking the sensitive pricing matter to the cabinet for approval. The Prime Minister’s Office has also been requested by the oil ministry to intervene so that CoS would take up the CBM pricing issue. The oil ministry, RIL and Essar did not respond to any queries regarding the matter.
The CBM pricing issue has been referred to the Rangarajan panel as the oil ministry is in a fix because of big gap between gas prices derived by Reliance and Essar, officials said. Essar has discovered CBM price at $4.20/unit while Reliance’s market price is about $13/unit.
“It is not unusual that CBM prices have regional variations, depending on its proximity to consumers. CBM quantities are relatively small compared to natural gas produced from blocks such as Reliance-operated KG-D6,” a government official said requesting anonymity.
Once the pricing issue is solved, Essar’s Raniganj block and Reliance’s Madhya Pradesh CBM fields could start commercial production within a year of pricing approval, industry officials said. The three blocks are expected to produce about 5-6 million standard cubic metres per day.
RIL and Essar have been waiting for more than a year to get their gas prices approved but officials expect more delay as the Rangarajan panel could require one more extension before it would submit its recommendations.
Reliance first attempted in October 2011 to discover CBM price of its two blocks in Madhya Pradesh, but abandoned it after some tacit objection by the oil ministry. It made another attempt in February by inviting price bids from over 70 consumers that discovered $13 per unit price at an average benchmark crude oil rate of $100 per barrel, officials said.
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