ONGC will allow GAIL to market gas from C-series field

State-run Oil and Natural Gas Corporation (ONGC) has decided to bury the hatchet with Gas Authority of India Ltd. (GAIL) over marketing natural gas from its C-series field off the western coast.

ONGC says it will allow GAIL to market the gas. “The difference would only be of a dollar. Earlier, the thought was not to leave an investment of over Rs 3,000 crore idle. But now the decision is not to waste our time,” a senior official from ONGC told Business Standard.

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 field was given to ONGC by the government on nomination prior to the New Exploration Licensing Policy regime, though it does not fall in the administered price regime, and the contractor is entitled to freedom on pricing and marketing.

ONGC had, a few months ago, written to the Ministry of Petroleum and Natural Gas seeking permission to market the three million metric standard cubic metres a day (mscmd) from C-series as the ministry. This followed the government allowing producers to charge marketing margin on gas that is being supplied directly to consumers.

GAIL had also sought the rights to market the C-series gas. The ministry, however, had decided not to intervene in the matter and left the decision to the two companies. “We would have been allowed to charge Rs 200 per thousand cubic metre or 11.2 cents per million British thermal unit (mBtu) as marketing margin. We could have also split the marketing margin,” added the ONGC official.

C-series field produces 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 next monsoon. The peak output may last for five years.

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.