Govt relaxes guidelines for small, isolated gas fields

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The government has further relaxed rules for selling natural gas produced from small and isolated fields by waiving off time stipulation for fields located in the North East India.

The oil ministry had in July 2013 allowed pricing freedom for gas produced from small, isolated fields and given marketing freedom by imposing no obligation of seeking customers only from the fertiliser and power sectors.

The policy however stipulated that only those customers who can take supply within 90-days be sold the gas. In view of the difficulties, this timeline has now been extended to one year, said an Oil Ministry order.

"The National Oil Companies (NOCs) have brought to the notice of the Ministry that customers of North East Region are facing various difficulties in utilising the gas within 90 days and have been requesting for longer lead time for monetisation of gas from small and isolated fields.

"Considering the difficulties of North East customers, the Government has decided to increase the period of 90 days for off-take of gas from the date or readiness indicated by the NOCs to one year in respect of small and isolated fields located in the North East Region," it said.

The policy allows producers from such fields to sell gas at market rates by inviting competitive bids from prospective consumers. Companies will fix minimum price for their gas, which would be the prevailing government-determined rate, and ask interested buyers to offer more through bidding.

Current gas price as per the formula approved by the BJP- led government in October last year, is $4.24 per million British thermal unit.

The guidelines for marketing of gas from small, isolated stated that it was imperative that NOCs are able to quickly monetise the output of their discoveries and defined such fields as ones "whose peak production is less than 0.1 million standard cubic meters per day and are situated more than 10 km away from the gas grid."

Oil and Natural Gas Corp (ONGC) and OIL have several such discoveries, which cumulatively produce around 3-4 mmscmd, enough to generate about 900 MW electricity.

State-owned ONGC had in November last year used e-tendering to finalise a price of $10.10-11.20 per mmBtu for sale of gas from new marginal fields in Gujarat and Andhra Pradesh.

It finalised a price of $10.10 per mmBtu for gas from Gamij-GGS-2 field and a rate of $11.10 per mmBtu for Gamij-GGS-3 field, both in Gujarat.

For the Warosan-4 field in Mehsana basin of Gujarat, it has finalised a rate of $10.50 per mmBtu, sources said.

In case of Triputallu, Kaza, Mandapeta-23, Gokarnapuram and Suyyaraopeta marginal fields in Andhra Pradesh, the firm has finalised a price of $11.20 per mmBtu.