State-owned Oil and Natural Gas Corporation (ONGC) is looking for a minimal USD 17 value for the gasoline it plans to supply from coal seams in its Bokaro CBM block in Jharkhand.
ONGC invited bids for the sale of 0.20 million normal cubic metres per day of gasoline it plans to supply from the Bokaro CBM block by the year-end, in response to a young doc.
It sought bids on a method listed to the prevailing Brent crude oil value.
The reserve or ground value of gasoline will probably be 14 per cent of the Dated Brent crude oil Price plus USD 1 per million British thermal unit, ONGC stated within the tender.
Bidders should quote a premium they’re prepared to supply over this reserve value.
The ground value would be the government-mandated value for home pure gasoline 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 stated.
At the present Brent crude oil value of USD 115 per barrel, the reserve gasoline value involves USD 17 per mmBtu.
The government-mandated value of home gasoline is presently USD 6.1 per mmBtu.
The value sought by ONGC is in keeping with current trade developments.
In March, Reliance Industries Ltd offered coal-bed methane (CBM) gasoline from a Madhya Pradesh block for over USD 23 per mmBtu to companies, together with GAIL, GSPC and Shell.
Reliance offered 0.65 mmscmd of gasoline from its coal-bed methane (CBM) block SP-(West)-CBM-2001/1 at a USD 8.28 premium over prevailing Brent crude oil costs. The agency had sought bids at a premium over the bottom of 13.2 per cent of Brent crude oil costs.
At the present Brent crude oil value of USD 115 per barrel, the bottom involves USD 15.18 per mmBtu and including USD 8.28 premium bid by state-owned gasoline utility GAIL and different companies, the ultimate value involves USD 23.46 per mmBtu.
While the federal government each six months fixes the worth of pure gasoline produced from typical fields, the pricing of gasoline from coal seams, referred to as CBM, is free or market-determined.
ONGC stated the gasoline will probably be accessible on the market from December 15. “The gas will be offered for a fixed term of 1 year.” ONGC holds an 80 per cent stake within the Bokaro coal-bed methane (CBM) block whereas the remaining 20 per cent is with Indian Oil Corporation (IOC).
State gasoline utility GAIL (India) Ltd will present pipeline connectivity for the gasoline to be transported to customers.
E-auction will probably be held on July 20.
Source: www.financialexpress.com”