Richa Mishra

New Delhi, Nov. 8

ONGC may be allowed to sell gas from its marginal C-series field at the current market determined price of $4.75/mBtu. This is against $5.5/mBtu, a price firmed up by the company.

Official sources told Business Line that, “It has been decided to allow ONGC to sell this gas at current prices till a final decision is taken for a uniform gas price regime in the country.”

Though ONGC will be allowed to sell this gas at a market determined price, it would not be $5.5/mBtu, sources said.

GAIL (India) Ltd was to lift gas from ONGC’s field located 60 km west of Daman in the Tapti-Daman block of Mumbai Offshore from August at $5.5/mBtu. The two companies had already entered into an understanding for this. But, the Petroleum Ministry had asked ONGC to put the agreement on hold till a decision on pricing was taken.

When asked whether the two companies will need to enter into a fresh agreement, sources said, “a fresh agreement is not required. A change in the pricing part of the current agreement will be made or a side letter be sent.”

According to the agreement, GAIL will receive one mscmd (million standard cubic metres a day) of gas initially, which would be subsequently increased to 2.8-3 mscmd.

A market determined price depends on demand and currently it is in the $4.75-$7/mBtu range, excluding transmission charges, taxes, marketing margins and charges for services.

ONGC gets market price for gas from Ravva Satellite ($4.3/mBtu, which is being reviewed) and from Panna-Mukta-Tapti ($5.65/mBtu and $5.73/mBtu) joint venture fields.

A major portion of the gas sold by ONGC is at a Government-controlled price of about $1.8/mBtu mainly for the use of the power and fertiliser sectors.

The company has been seeking a revision of the administered gas price.

ONGC has been maintaining that the C-series field in Mumbai offshore is viable only at a market-related price. Though the field was given to ONGC on nomination basis prior to the NELP (New Exploration Licensing Policy) regime, it does not fall into the administered price regime, and the contractor is entitled to a market price, sources said.

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