You are here: Home » Companies » News
Business Standard

ONGC seeks minimum $17 price for coal gas from Bokaro block in Jharkhand

ONGC invited bids for the sale of 0.20 million standard cubic metres per day of gas it plans to produce from the Bokaro CBM block by the year-end

ONGC Oil | Coal gas | Jharkhand

Press Trust of India  |  New Delhi 

ONGC, ONGC building

State-owned Oil and Natural Gas Corporation (ONGC) is seeking a minimum USD 17 price for the gas it plans to produce from coal seams in its Bokaro CBM block in .

ONGC invited bids for the sale of 0.20 million standard cubic metres per day of gas it plans to produce from the Bokaro CBM block by the year-end, according to a tender document.

It sought bids on a formula indexed to the prevailing Brent crude oil price.

The reserve or floor price of gas will be 14 per cent of the Dated Brent crude oil Price plus USD 1 per million British thermal unit, ONGC said in the tender.

Bidders will have to quote a premium they are willing to offer over this reserve price.

The floor price will be the government-mandated price for domestic natural gas plus a USD 1 per mmBtu mark-up.

The "Contract Gas price shall be the higher of the 14 per cent of Dated Brent Price plus USD 1 per mmBtu plus 'P' (the biddable parameter); or the floor price," it said.

At the current Brent crude oil price of USD 115 per barrel, the reserve gas price comes to USD 17 per mmBtu.

The government-mandated price of domestic gas is currently USD 6.1 per mmBtu.

The price sought by ONGC is in line with recent industry trends.

In March, Reliance Industries Ltd sold coal-bed methane (CBM) gas from a Madhya Pradesh block for over USD 23 per mmBtu to firms, including GAIL, GSPC and Shell.

Reliance sold 0.65 mmscmd of gas from its coal-bed methane (CBM) block SP-(West)-CBM-2001/1 at a USD 8.28 premium over prevailing Brent crude oil prices. The firm had sought bids at a premium over the base of 13.2 per cent of Brent crude oil prices.

At the current Brent crude oil price of USD 115 per barrel, the base comes to USD 15.18 per mmBtu and adding USD 8.28 premium bid by state-owned gas utility GAIL and other firms, the final price comes to USD 23.46 per mmBtu.

While the government every six months fixes the price of natural gas produced from conventional fields, the pricing of gas from coal seams, called CBM, is free or market-determined.

ONGC said the gas will be available for sale from December 15. "The gas will be offered for a fixed term of 1 year."

ONGC holds an 80 per cent stake in the Bokaro coal-bed methane (CBM) block while the remaining 20 per cent is with Indian Oil Corporation (IOC).

State gas utility GAIL (India) Ltd will provide pipeline connectivity for the gas to be transported to users.

E-auction will be held on July 20.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, June 21 2022. 15:28 IST