ONGC Seeks Patrons For KG Fuel, Needs Minimal $6.6 Worth

ONGC seeks buyers for KG gas, wants minimum $6.6 price

State-owned Oil and Pure Fuel Company (ONGC) on Monday invited bids for the sale of preliminary 2 million normal cubic meters per day of gasoline from its KG basin fields at a minimal worth of USD 6.6 per mmBtu.

Based on the tender doc, ONGC intends to start out pure gasoline sale from its KG-DWN-98/2 block, which sits subsequent to Reliance Industries Ltd (RIL)-BP Plc operated KG-D6 fields, from June-end.

Initially, 2 million normal cubic metres per day of gasoline has been provided on the market by an e-auction.

ONGC has sought bids listed to Brent crude oil. Bids have been sought at a minimal of 10.5 per cent of the three-month common Brent crude oil worth.

On the present Brent crude oil worth of USD 63, the minimal worth involves USD 6.6 per million British thermal unit.

This worth, nonetheless, might be topic to the ceiling or cap mounted by the federal government for deepsea fields each six months. The cap for six months starting April 1 is USD 3.62 per mmBtu.

This primarily implies that bidders could nook gasoline by providing to pay USD 7, however the consumers should pay not more than the ceiling worth of USD 3.62.

A senior ONGC official stated the ceiling worth is anticipated to rise to USD 5.5-5.6 on the subsequent revision due on October 1.

“The present ceiling worth is one-third lower than the naked minimal value of manufacturing from a deepsea discipline. After together with the price of cash in addition to margin, gasoline worth needs to be USD 6 and never USD 3.62,” he stated.

Earlier this month, Reliance Industries Ltd and its companion BP Plc of UK sought bids for the sale of 5.5 mmscmd of extra pure gasoline that might be accessible on the market from their japanese offshore KG-D6 block.

The e-auction is slated for April 23 and the gasoline provide will begin from late April or early Might, in accordance with the tender doc.

Bidders should quote a worth linked to Platts JKM (Japan Korea marker) – the liquefied pure gasoline (LNG) benchmark worth evaluation for spot bodily cargoes.

The bottom bid that may be positioned is JKM minus USD 0.3 per million British thermal unit. The very best acceptable bid could be JKM plus USD 2.01 per mmBtu.

This is similar benchmark RIL-BP had utilized in February to promote out 7.5 mmscmd of gasoline from the block.

On the present worth, the bottom worth for the 5.5 mmscmd of gasoline that RIL-BP are auctioning comes to close USD 6.5 per mmBtu.

However similar to ONGC, RIL-BP too is entitled to a most of USD 3.62 per mmBtu ceiling mounted by the federal government for a six-month interval to September 30.

ONGC’s KG-DWN-98/2 or KG-D5 block is anticipated to have a peak manufacturing charge of 15.25 mmscmd of pure gasoline and 80,000 barrels per day of oil.

The corporate is prone to come out with one other tender later this yr for the sale of 5 mmscmd of gasoline from subsequent yr.


Disclaimer: “Reliance Industries Ltd. is the only beneficiary of Unbiased Media Belief which controls Network18 Media & Investments Ltd.”

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