GAIL India to buy gas from ONGC at $5.5 per mmBtu

State-run GAIL India will buy gas from Oil and Natural Gas Corp's (ONGC) new field to come on production in Mumbai offshore from next month at $5.5 per million British thermal unit (mmBtu).

"We will buy gas from ONGC's C-series field from August 1," GAIL Director (Marketing) B C Tripathi said here.

The field would begin with 0.8 million standard cubic metres per day (mmscmd) output that would rise to 2.8 mmscmd in a years time, he said.

Incidentally, Tripathi will also take over as the chairman and managing director of the state gas utility on August 1. He will succeed U D Choubey who retires on July 31.

Tripathi said GAIL would buy gas from C-series at $5.5 per mmBtu, 30 per cent more than the price at which Reliance Industries sell gas from the nation's biggest gas field in Krishna Godavari basin off the east coast.

Reliance gets $4.215 per mmBtu for the gas it produces from KG-D6 fields off the Andhra coast. The price is fixed for the first five years of production. KG-D6 gas production began on April 2 and is slated to rise to 80 mmscmd by year-end, nearly doubling the nation's gas output.

Tripathi said according to the production profile given by ONGC, the peak output of 2.8 mmscmd from C-series will last 5-6 years.

The price for C-series fields is similar to what GAIL pays for gas from the western offshore Panna/Mukta and Tapti or PMT, fields that are jointly owned by British Gas, Reliance and ONGC. GAIL pays pay $5.7 per mmBtu for PMT gas, compared with $4.3 per mmBtu for Cairn India-operated Ravva field off the east coast.

None of the prices include transmission charges, marketing margins or local levies on gas sales.

ONGC sells a large chunk of its gas at the government controlled price of about $1.8 per mmBtu.

The oil major has invested Rs 3,195 crore to develop the C-series marginal field that is estimated to hold in-place reserves of 15.54 billion cubic metres of gas and 4.46 million cubic metres of condensate.

The C-series field, was discovered in 1990s and is about 60 km west of Daman in the Tapti-Daman block offshore Mumbai at water depths ranging from 19 meters to 35 meters, but considered marginal until crude crossed the $100 a barrel mark last year.