New Delhi: State-owned Indian Oil Corporation (IOC), Adani-Total Gas Ltd and Shell were among the 29 companies that bid and bought natural gas to be produced from the deepest field in the KG-D6 block of Reliance Industries Ltd and bp, sources said.
IOC walked away with almost half of the 6 million standard cubic meters per day of gas sold in an e-auction on Wednesday while state-owned gas utility GAIL bought 0.7 mmscmd, Adani-Total Gas Ltd 0.4 mmscmd, Shell 0.5 mmscmd, GSPC 0.25 mmscmd and IGS another 0.5 mmscmd, two sources with knowledge of the matter said.
Reliance-bp on Wednesday held an e-auction for sale of gas from the MJ field in their eastern offshore KG-D6 block after incorporating the government’s new marketing rules to give CNG-selling city gas companies first priority over supplies.
The bidding saw participation from 41 companies from various sectors including city gas, fertiliser, oil refinery, glass, ceramics and traders, sources said adding unlike previous auction Reliance did not buy any of KG-D6 gas.
The price was indexed to the global LNG market, JKM but will be subject to the government-notified ceiling price. Bidders were asked to quote variable ‘V’ in the gas price formula ‘JKM + V’.
The final bid price came at $0.75 per million British thermal unit premium over the JKM price (JKM + $0.75 per mmBtu), they said.
JKM price for May is around $12.6 per mmBtu and the implied price for MJ gas comes to $13.35.
But the bidders will only have to pay the ceiling or the cap price that the government fixes bi-annually for gas produced from difficult areas such as deepsea and high-temperature, high-pressure (HTHP).
The ceiling price for April to September is $12.12 per mmBtu, they said adding 29 bidders secured gas supplies for 5 years.
The successful bidders included India’s largest oil firm IOC which bought 1.4 mmscmd of gas for its own refineries and another 1.5 mmscmd acting as aggregator for the urea sector.
India’s largest gas firm GAIL cornered the second highest quantity of 0.7 mmscmd while Adani-Total Gas Ltd (the joint venture of Adani Group and France’s TotalEnergies) took home 0.4 mmscmd. Gujarat State Petroleum Corporation (GSPC) bought 0.25 mmscmd while Shell and India Gas Solutions purchased 0.5 mmscmd each.
CNG and piped cooking gas retailing city gas operators GAIL Gas, Mahanagar Gas Ltd, Indraprastha Gas Ltd, AG&P, Torrent Gas, IRM and Think Gas were among the other successful bidders who took a combined 0.5 mmscmd.
Reliance-bp had originally planned the auction in January but days before that the Ministry of Petroleum and Natural Gas, on January 13, published new rules for the sale and resale of gas produced from discoveries in deep sea, ultra-deep water and HTHP areas.
This led to the auction being suspended and re-launched on March 9.
Gas produced from wells drilled below seabed is used to produce electricity, make fertiliser or turned into CNG for powering automobiles or piped to household kitchens for cooking as well as in industries.
The new government rules require bidders to state upfront if they were purchasing the gas through the auction for ‘own use as end-consumers (including for use of their group entities) or as a trader.
While end consumers were allowed to resale any unconsumed gas, traders participating in the auction were allowed to resell subject to a maximum trading margin of Rs 200 per thousand cubic meters.
“In any situation, which may require proportionate distribution of the gas offered under the bidding process, the contractor (company selling the gas) shall offer gas to bidders belonging to CNG (transport)/PNG (domestic) sector, fertilizer, LPG and power sector in that order,” the ministry had said, adding any leftover gas shall be offered to other bidders.
Besides incorporating the changes in their tender, Reliance and bp have increased the duration of supply contract to 5 years instead of 3 years offering the January auction. Supplies are to start from April 16, according to the tender document.