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Oil ministry lets ONGC sell gas from small fields via open bids

Oil ministry lets ONGC sell gas from small fields via open bids
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Oil Ministry has allowed national oil companies ONGC and Oil India Ltd to sell any new natural gas supplies from their small and isolated fields through an open tender.

While the BJP-led government had approved an international gas hub-based formula for all of the domestically produced natural gas in November last year, small and isolated fields were exempt. The Oil Ministry on April 1 issued amendment to the guidelines for pricing of gas from small and isolated fields by allowing producers to sell gas at market rates by inviting competitive bids from prospective consumers.

Companies will fix minimum price for their gas, which would be the prevailing government-determined rate, and ask interested buyers to offer more through bidding, officials said. Government had on March 31 announced $4.66 per million British thermal unit as the gas price for six-month period ending September 30 based on the approved formula.

“In case of new supplies, the price would be determined by NOCs (national oil companies) by calling bids through an open competitive bidding process,” the guideline said. The ministry guidelines state that it was imperative that NOCs are able to quickly monetise the output of their discoveries particularly marginal ones where where production is small and fields are isolated.

The guidelines defined such fields as ones “whose peak production is less than 0.1 million standard cubic meters per day and they are situated more than 10 km away from the gas grid.”

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