ONGC wants to itself market its western field's C-series gas

GAIL wants the job; PetroMin says settle it between yourselves.

Oil and Natural Gas Corporation (ONGC) will be itself marketing natural gas from its C-series field off the western coast. This will allow the company to earn marketing margin on the gas instead of GAIL India taking advantage of it.

The Ministry of Petroleum and Natural Gas has left the decision of marketing of C-series gas to the two companies. The C-series fields on the western offshore went on production last month. ONGC recently asked the ministry to be allowed to market the three million standard cubic metres a day (mscmd).

GAIL had also sought the rights to market the gas but a senior ministry official said the government had refused to intervene. “It is for ONGC and GAIL to decide. We will not intervene and expect the companies to settle this amicably. GAIL already markets ONGC’s gas from the Bombay High fields,” said the official.

C-series is a marginal field located 60 km west of Daman in the Tapti Daman block of the Mumbai Offshore basin. It was developed by ONGC at an investment of Rs 3,195 crore. The empowered group of ministers had, in July, allocated the C-series gas to users in the Uran region of Maharashtra.

“The ministry, post its revision of APM (administered pricing mechanism) gas prices early this year, also said the producer can charge marketing margins if the gas reaches the end user directly. We would be allowed to charge Rs 200 per thousand cubic metre or 11.2 cents per million British thermal unit (mBtu) as marketing margin. We do not want to compromise on that,” said a senior ONGC official.

A senior GAIL executive declined to comment. GAIL’s marketing margin from sale of re-gasified LNG is $0.18 per mBtu. From the Panna-Mukta and Tapti fields in the Western Offshore, it is $0.12 per mBtu and $0.11 per mBtu from the Cairn India-operated Ravva field.

An ONGC official said the C-series field was producing around one mscmd of gas and will reach a peak output of 2.8 mscmd. Eight wells are in production and the other seven will be drilled after the monsoon. The peak output may last five years.

ONGC has been maintaining it has the right to market the gas. Though the field was given to ONGC by government nomination prior to the Nelp (New Exploration Licensing Policy) regime, it does not fall into the administered price regime, and the contractor is entitled to freedom on pricing and marketing.

While ONGC had earlier sought a sale price of $5.5 per mBtu for C-series gas, the government has approved a price of $5.25 per mBtu. The price is fixed for the first five years of production, till March 2014. Reliance Industries sells its gas from the KG-D6 fields off the Andhra coast at $4.205 per mBtu.