Millennium Post

Oil Ministry seeks clarifications from RIL on CBM price

Sources said the oil ministry wanted RIL to give year-wise production profile of CBM gas separately for the two Sohagpur blocks it has in Madhya Pradesh, and timelines for connecting the gas to the main pipeline grid.

The ministry also wanted to know the basis of charging USD 0.15 per mmBtu marketing margin.

While production profile and pipeline connectivity have no bearing on price approval, the marketing margin charged by an operator is outside the purview of PSC and RIL.

RIL as such had not sought approval for the marketing margin but had only - as a matter of information - reported to the ministry what it proposes to charge over and above the approved gas sale price.

Also, the ministry wanted to know from when RIL would implement the gas utilisation policy of the government wherein supply of gas was ensured to priority sectors like fertiliser, LPG and power plants. Even here the operator has no role as the gas is allocated to users by the government.

Incidentally, the Minister of State for Petroleum and Natural Gas R P N Singh in a written reply to a question in Rajya Sabha on 24 April [the same day on which clarifications were sought from RIL], stated that the government will decide on RIL's CBM gas price proposal 'in line with contractual provisions'.

'A proposal dated 16 September 2011 for approving the formula for pricing of commercial production of CBM gas from two blocks SP(West)-CBM-2001/1 and SP(East)-CBM-2001/1 was received from RIL,' he had said.

RIL in the proposal asked for a price equivalent to the rate at which RasGas sells gas in its liquid form [liquefied natural gas] to India.

The DGH on 15 November 2011, a day before the 60-day deadline was to expire, sought clarifications from RIL, which provided the information.

'While the proposal of RIL was under examination, RIL submitted a proposal to the Ministry of Petroleum and Natural Gas (MoPNG) vide letter dated February 21, 2012, that they have undertaken a parallel open bidding process and requested for approval of the basis for pricing of CBM gas to be produced from SP(West)-CBM-2001/1 and SP(East)-CBM-2001/1 blocks, in line with the provisions of the CBM contract and MoPNG guidelines,' Singh stated.

'As per Article 18.6 of CBM Contract, the formula or the basis on which the CBM prices shall be determined, shall be approved by the government prior to the sale of CBM to consumers/buyers within 60 Business Days from the receipt of proposal or from the date of receipt of clarification/ additional information, where asked for by the government,' he added.
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