GSPC Expects Imported LNG Price for its KG Basin Gas

Gujarat State Petroleum Corp (GSPC) is planning to sell natural gas from its KG basin fields at imported LNG rate of $14.2 per mmBtu, Press Trust of India said in a news report. 

In a nearly month-long, elaborate market price discovery exercise, the company found hoards of buyers willing to pay a rate equivalent to what India pays to Qatar for importing gas in its liquid form (LNG), PTI reported. 

In all 37 companies put in as many as 53 bids for about 75 million standard cubic meters of gas per day, more than 14 times the peak output of 5.24 mmscmd GSPC's Deen Dayal West (DDW) gas field in block KG-OSN-2001/3, industry sources told PTI. 

The company had on February 25 asked bidders to quote a positive or a negative number to be added to India's liquefied natural gas (LNG) import formula of 12.67 per cent of Brent crude oil plus $0.26 per million British thermal unit. 

GSPC prescribed a minimum sale price of $8.50 per mmBtu, at floor rate of $65 per barrel of oil, PTI said. 

Sources said demand far exceeding the supply was generated when the biddable variable was kept at zero. At cap oil price of $110 per barrel, the gas price translates into $14.2 per mmBtu. 

The formula is the same on which RIL a year back sought price bids for sale of gas it will produce from its Sohagpur coal-bed methane (CBM) block in Madhya Pradesh.