Billionaire Mukesh Ambani’s Reliance Industries has built two-thirds of its own new gas from a KG-D6 block sold under new rules with state-owned GAIL and Royal Dutch Shell acquiring smaller quantities, sources said.
UK Trust and BP Plc on Friday would sell 7.5 million cubic meters per day of booster gas from an R-series gas field in blockchain KG-D6, benchmarking it to a gas signal for the first time in the country.
The auction was held under liberal price discovery rules notified to the government that allowed the natural gas producer’s affiliates to enter and purchase natural gas.
Reliance O2C, which was affiliated with Reliance, raised 4.8 mmscmd of gas in an auction that lasted seven and a half hours, said sources with direct experience of the development.
GAIL (India) State Gas Facility Limited acquired 0.85 mmscmd of supplies while Shell acquired 0.7 mmscmd. Adani Total Gas Ltd acquired 0.1 mmscmd, Hindustan Petroleum Corporation Ltd (HPCL) 0.2 mmscmd and Torrest Gas 0.02 mmscmd.
Other customers include IRM Energy (0.1 mmscmd), PIL (0.35 mmscmd) and IGS (0.35 mmscmd), they said.
Sources stated that the gas was purchased at a price of USD 0.18 per million British thermal unit discount to JKM ie a price of JKM (minus) USD 0.18 with tenancies ranging from 3 to 5 years.
Trust submitted emails submitted for comments did not respond.
O2C trust is the new unit that owns the company’s distillery and petrochemical assets.
The e-application process was conducted through a web-based online electronic applications platform by CRISIL Risk and Infrastructure Solutions Limited (CRIS), an independent group powered by the Director General of Hydrocarbons (DGH). CRIS partnered with e-Procurement Technologies Limited (EPTL) and developed an e-applications platform.
The application process was conducted in accordance with the guidelines issued by the government to October 2020.
Sources said the bidding process for gas sales was launched on December 30, 2020 and saw the participation of about 15 bidders from the city’s gas circulation sector, steel, power, refineries, petrochemicals, resellers and businesses. other.
The e-application process required applicants to submit their price bids linked to JKM’s international LNG price criteria (Japan Korea Signal). The JKM represents a price for LNG spot delivered in Asian market and is now widely used in LNG industry as a signal for medium / long term LNG contracts instead of traditional oil connection .
This was the second time Reliance-BP ran an e-bidding process on the basis of a dynamic auction for the sale of KG-D6 gas. Earlier in November 2019, 5 mmscmd of natural gas was sold at a price in the range of around 8.6 per cent of Brent crude oil for a 2 to 6 year tenure.
Reliance-BP started gas production on December 18 last year from the R Cluster freshwater gas field in the KG D6 block off the east coast of India.
The duo is developing three deep water gas projects in the KG-D6 block – R Cluster, Satellites Cluster and MJ – which are expected to meet around 15 per cent of India’s gas demand by 2023.
R Cluster is the first of three projects to come forward and is the deepest gas field in Asia.
E-tender auction rules required bidders to “declare the variable denominated as‘ V ’in USD per million British thermal unit (MMBtu) terms. “
“The price of the gas (in USD / MMBtu (GCV)) = JKM + V,” the application statement said.
GCV stands for total caloric value.
‘V’ can be a positive, zero or negative number and up to two decimal places but cannot be less than (-) 0.30 USD / MMBtu, he said.
This means that users must provide values of -0.30 or higher of ‘V’.
If the average JKM was USD 6 per MMBtu, the price will be USD 5.82 per MMBtu.
But Reliance-BP can only get the government a cap price for gas from deep-sea fields.
JKM’s gas prices are the first time home-made gas is sold at rates tied to international gas standards, industry sources said.
Also, this is the first gas price finding since the October 2020 decision by the government outlining similar e-bidding norms for finding the market price.
That Cabinet decision also allowed gas to be sold to ‘affiliates’ and so while Reliance-BP affiliates could not participate in the November 2019 price discovery, they did in an email on 5 February.
The government has given operators freedom to find market prices but this rate is subject to a price cap or cap that the government notifies them every six months. The cap for six months to March 31, 2021, is USD 4.06 per mmBtu.
And accordingly, Reliance-BP would only receive that amount for the gas.
Essar Steel, Adani Group and GAIL bought with the state in November 2019 the bulk of the first 5 mmscmd of gas expected to be extracted from R-Series in the KG-D6 block by claim between 8.5 and 8.6 percent of Brent’s date price.
In that claim, Reliance-BP had asked gas consumers to quote a price (expressed as a percentage of Brent crude oil level by date), supply time and the amount of gas required.
A minimum floor or quota of 8.4 percent of Brent’s date price was set, meaning applicants had to provide 8.4 percent or a higher percentage to get a gas supply.
Dated Brent means Brent’s published price averages for three calendar months immediately preceding the relevant contract month in which the gas supply will be made.
It gained USD 4.205 per MMBtu for gas from the D1 and D3 and MA ranges in April 2019 and March 2014. It would have doubled that amount if a new formula recommended by the Rangarajan committee had been adopted but the new BJP government abolished and introduced a new formula on gas prices at levels common in exit-exporting countries such as the US and Russia.
Rates reached USD 5.05 in 2014 and are currently at USD 1.79 per mmBtu.
Reliance-BP is investing 5 billion USD in the completion of three deep water gas projects in the KG-D6 block of R-Cluster, Satellites Cluster, and MJ that are expected to meet about 15 percent of India’s gas demand by 2023.
The R-Cluster will have a maximum output of 12.9 mmscmd while satellites, which are expected to start production from the third quarter of the 2021 calendar year, would yield a maximum of 7 mmscmd. The MJ range will start producing in the third quarter of 2022 and will have a maximum yield of 12 mmscmd.
Reliance has so far detected 19 gas detections in the KG-D6 block. Of these, D-1 and D-3 – the largest in the lottery – were introduced since April 2009 and MA, the only oil field in the block, was put into production in September 2008.
Although the MA range ceased to last year, production from D-1 and D-3 ceased in February.
Other results were provided or removed by the government for not meeting timelines for starting production. The block operator’s trust is with 66.6 percent interest while BP holds what’s left.
(Only the headline and image of this report may have been reworked by Industry Status staff; the rest of the content is automatically generated from syndicated feeds.)