Essar Steel, Adani, GAIL, HPCL buy bulk of Reliance gas
NEW DELHI, Nov 17: Essar Steel, Adani Group and state-owned GAIL have bought majority of natural gas from Reliance Industries' newer fields in the KG-D6 block at an indicative price of USD 5.04 - 5.16 per unit, industry sources said.
Essar Steel picked up 2.25 million standard cubic meters per day or about half of the available volumes in the day long auction conducted on November 15.
Gujarat State Petroleum Corp (GSPC) picked up 1.2 mmscmd while Adani Group, Mahanagar Gas Ltd and GAIL bought 0.3 mmscmd each, sources said.
Hindustan Petroleum Corp Ltd (HPCL) bought 0.35 mmscmd and the remaining 0.10 mmscmd went to GSFC/GNFC.
Reliance and its partner BP Plc of the UK had sought bids from potential users for the 5 mmsmcd of natural gas they plan to produce from the R-Cluster Field in KG-D6 block from mid-2020.
Bidders were asked to quote a price (expressed as a per centage of the dated Brent crude oil rate), supply period and the volume of gas required. Dated Brent means the average of published Brent prices for three calendar months immediately preceding the relevant contract month in which gas supplies are made.
Sources said Reliance had set a floor or minimum quote of 8.4 per cent of dated Brent price -- which meant that bidders had to quote 8.4 per cent or a higher per centage for seeking gas supplies.
In the November 15 auction, bidders quoted between 8.4 and 8.6 per cent slope to corner all of the 5 mmscmd supplies available. This translates into a price of between USD 5.04 per million British termal unit and USD 5.16 per mmBtu rate at Brent oil price of USD 60 per barrel.
Sources said while bankruptcy-hit Essar bought gas to feed its steel plants, other buyers including Adani Group picked up the volumes for their city gas operations of retailing CNG to automobiles and piped cooking gas to households.
The volumes are mostly planned for usage in western India particularly in Gujarat where the gas can be delivered through a single pipeline - East-West pipeline. The delivered price in Gujarat is likely to be around USD 6.50 per mmBtu, they said. -PTI