RIL Gets Over 70 Bids for its CBM Gas
Reliance Industries has received over 70 bids for buying its coal bed methane gas, Press Trust of India reported Sunday. The bids have come around the price close to the rate at which LNG is imported in the country.
The 70 bids constitute a total demand of more than 90 million standard cubic meters per day.several times more than the peak output of 3.5 mmscmd that the company plans to produce from Sohagpur block in Madhya Pradesh by 2014-end.
The company had on February 3 sought a price of 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus $0.26, plus 'V', where 'V' was the biddable number that users were asked to quote. 'V' could be positive or negative.
The formula is the same at which Petronet LNG Ltd, the nation's largest liquefied natural gas importer, buys 7.5 million tonne per annum of LNG from RasGas of Qatar. RasGas charges 12.67 per cent of JCC and Petronet pays a further $0.26 per mmBtu for shipping the gas in its liquid form (LNG) from Qatar.
According to the report, RIL got a highest bid of a positive 1.5 for 'v' while Rashtriya Chemical and fertiliser (RCF) bid the a negative 15 for 'v'.
At $100 a barrel oil price, the CBM will cost $14.43 per million British thermal unit (12.67 + 0.26 + 1.5). But at the price bid by RCF, RIL will have to pay $2.07 per mmBtu besides selling gas for free (12.67 + 0.26 - 15), they said.
While fertiliser companies bid a negative 'v', there was enough demand to at a minimum of a positive 0.1 for 'v' to sell all of the 3.5 mmscmd of Sohagpur gas.
If the government accepts this, RIL will get USD 13.03 per mmBtu for the coal-bed methane (CBM) gas.
The price will be higher than $4.205 per mmBtu rate fixed for natural gas produced from RIL's Krishna-Godavari Basin D6 fields for five years ending March, 31, 2014.
Great Eastern Energy Corp (GEECL) sells CBM produced from its Raniganj block in West Bengal at USD 6.79 per mmBtu while Essar Oil has proposed a rate of USD 4.20 per mmBtu for CBM it plans to produce in the same state.
On top of the CBM price set by the government, RIL will charge $0.15 per mmBtu as a marketing margin.