GAIL may pay more for Panna-Mukta gas

State-owned GAIL will continue to get gas from the Panna-Mukta-Tapti (PMT) fields after March 31.

However, GAIL may have to pay up to 30 per cent more for the gas.

The increase is charged by the consortium of Oil and Natural Gas Corporation (ONGC), Reliance Industries (RIL) and British Gas (BG) operating the fields.

Petroleum Secretary MS Srinivasan on Tuesday convened a meeting of the ONGC-RIL-BG joint venture and GAIL and ironed out a compromise between the two parties.

Sources said the new agreement for supplying 6 million standard cubic metres per day of gas would be signed by March 10, after which, the prices would be finalised.

GAIL, in turn, will have to pay a price derived from the formula based on basket of fuel oil indicated in the production sharing contract for the fields.

This works out to be nearly $5 per million british thermal unit (mbtu) against the $3.86 per mbtu cap price at present. The government had asked the ONGC-BG-RIL combine to supply 6 mmscmd of gas from the fields to GAIL for a year from April 1, 2005, so that supply to power and fertiliser companies on HBJ pipeline were not affected.

With the expiry date of the above agreement coming closer, the consortium sought the petroleum ministry's permission to directly sell all the 10.8 mmscmd gas produced from the PMT fields at market price from April 2006.

They currently have rights to sell only 4.8 mmscmd from the fields at market price and the remaining goes to GAIL at a regulated price.

GAIL, on the other hand, had asked for the supply as most of the gas went to priority sectors like power and fertiliser.