Panna-Mukta gas to cost 30% more

The consortium of Oil and Natural Gas Corp, Reliance Industries and BG Group of UK will continue selling gas from Panna/Mukta and Tapti fields to state-run gas firm GAIL (India) Ltd beyond March 31, 2006 but will charge at least 30 per cent more than the current price.

Petroleum secretary M S Srinivasan convened a meeting of the ONGC-RIL-BG joint venture and GAIL on Tuesday, where it was decided to continue with the present arrangement of selling about 6 million standard cubic meters per day of gas from the PMT fields to GAIL beyond the expiry of current contract on March 31, 2006, industry sources said.

However, GAIL will pay a price derived from the formula based on basket of fuel oil indicated in the production sharing contract for the fields. As per the formula, GAIL would have to pay over $5 per million British thermal unit, as against the $3.86 per mBtu cap price it currently pays to ONGC-RIL-BG.

The consortium had last year sought petroleum ministry's permission to directly sell all the 10.8 mmscmd gas produced from PMT fields at market price. They currently have rights to sell only 4.8 mmscmd from the fields at market price and the remaining goes to GAIL at a capped price.

GAIL had pleaded for continuation of the supplies as most of the gas went to priority sectors of power and fertiliser.

The petroleum secretary on Tuesday heeded to GAIL's appeal but asked it to pay a price determined by the PSC formula. The price arrived as per PSC formula was more than $4.6 per mBtu price ONGC is getting for sale of 1.5 mmscmd of gas (from the share not earmarked to GAIL) to Rajasthan Rajya Vidyut Utpadam Nigam Ltd, sources said.

ONGC-BG Group-Reliance Industries had asked the petroleum ministry for permission to sell 6 million standard cubic meters per day of gas from Tapti and Panna-Mukta fields, currently being supplied to GAIL, directly to customers at market price from April 2006.

Currently, the joint operators sell 6 mmscmd of gas to GAIL at controlled price of $3.86 per mBtu or Rs 7,046 per thousand cubic meters (exclusive of sales tax). They market the remaining 4.8 mmscmd of gas from the fields at $4.08 per mBtu (or Rs 7448 per thousand cubic meters).

The government had asked ONGC-BG-RIL to supply 6 mmscmd of gas from the fields to GAIL for one year from April 1, 2005 so that power and fertiliser companies on HBJ pipeline do not get impacts.

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