Reliance seeks premium of at least $3.5 per barrel for oil from KG block

Reliance Industries Ltd is seeking a premium of at least $3.5 per barrel over an international benchmark for crude oil it produces for eastern offshore KG-D6 block, according to the tender the firm put out on Monday.

Reliance and its partner BP of the UK sought bids from domestic refiners for sale of 17,600 barrels (2,800 kilolitres) of crude oil every month from April 2025 to February 2026.

The crude oil has been priced at daily average price of Nigerian Bonny Light grade of crude oil plus $1.5 per barrel quality premium. Bidders have to quote a premium over this price, the tender document said.

Bonny Light last traded for $73.5 per barrel. On top of this, $1.5 per barrel is added as a composite premium "reflecting quality differential", it said, adding that interested buyers are required to a "biddable premium, up to one decimal place and greater than $ 2 per barrel".

The sale period can be extended by three months to one year on the same terms and conditions, including pricing formula.

Oil, which is turned into fuels like petrol and diesel when processed at refineries, will be delivered by the sellers at Gadimoga in East Godavari district of Andhra Pradesh.

Reliance holds 66.67 per cent interest in the predominantly gas-rich KG-DWN-98/3 block (KG-D6) in the Bay of Bengal. BP Exploration (Alpha) Ltd holds the remaining 33.33 per cent.

The two produce about 30 million standard cubic metres per day of gas from the block. A small quantity of crude oil is also produced, for which they have now sought bids.

Bids are due on January 24, 2025, the document said.

"The crude oil sold and delivered shall only be consumed/processed/refined in the buyer's owned and operated facility/(ies)/refinery/(ies) located within India," it added.

All taxes and duties, including excise duty, VAT, GST, will be paid by the buyer.