GAIL and Indus Gas agree new price terms
India's GAIL has agreed to pay at least $4.50/mmBtu, in gross calorific value (GCV) terms, for gas purchased from Indian concession RJ-ON/6 Block, operated by London-listed Indus Gas.
Indus Gas says the price revision moves the pricing floor for GAIL's purchases up to the existing realised price - the actual price paid under the previous framework - of around $5/mmBtu in net calorific value terms.
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The revision means GAIL will pay $6.10/mnBtu in GCV terms for the April 1 - September 30 period, equating to a real terms price increase of around 35%, Indus said.
RJ-ON/6 is situated in the Indus Basin in the north Indian state of Rajasthan, adjacent to several earlier discoveries in Pakistan's share of the basin, including Eni-operated Kadanwari, OGDC's Qadirpur and Pakistan Petroleum's Kandhkot.
The initial discovery well flowed near-pure methane during testing, at a 24-hour rate of 15mn ft3/day.
GAIL's gas sale purchase agreement dates to mid-2009, when it agreed to offtake roughly 33.5mn ft3/day of gas from RJ-ON/6 under "take or pay" terms.
These quantities are being fed to a 430 MW power plant owned by Rajasthan state. The power plant purchases gas from GAIL under a "back-to-back" sales arrangement. RJ-ON/6 also produces "modest" amounts of condensate.
Indus announced the price adjustment on August 18. It said the new arrangement reflected national guidelines on wholesale domestic gas prices, issued by New Delhi's division for petroleum planning and analysis.
Indus owns a 90% participating equity stake in RJ-ON/6, which is currently operated by India-based independent Focus Energy. Estimates prepared in 2012 by UK technical consultant Senergy pegged the licence's proved plus probable gas reserves at 573bn ft3.