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Reliance Industries Ltd and its partner bp plc on Monday canceled a planned auction for the sale of natural gas from the eastern offshore KG-D6 block after the government changed marketing rules to limit margins. Paused.
Reliance and its partner BP Exploration (Alpha) Ltd (BPEAL) said in a notice that the auction had been suspended indefinitely.
Electronic bidding for the sale of 6 million standard cubic meters of gas per day was originally scheduled for January 18, but was later postponed first to January 19 and then to January 24. .
On January 13, the Ministry of Petroleum and Natural Gas announced new regulations on the sale and resale of gas found in deep water, ultra-deep water, high pressure and high temperature areas. Marketing and pricing are free.
Bidders were required to state upfront whether gas was purchased through the auction for “end-consumer use (including group company use) or trader use.” Companies participating in the auction were allowed to resell subject to a trading margin of up to Rs 200 per 1,000 cubic metres.
“If a pro-rata share of the gas provided under the bidding process is required, the contractor (the company that sells the gas) will be responsible for the CNG (transport)/PNG (domestic) sector, Fertilizer, LPG and the Ministry for the remaining gas. will be offered to other bidders, he added.
The auction, launched by Reliance-bp on December 29, 2022, was intended to sell gas to end consumers who are not authorized to resell unconsumed gas.
It was also unclear about trader participation.
“We hereby inform you that the current bidding process will be suspended until further notice,” the companies said in a notice Monday.
The reason for the suspension was not disclosed, but industry sources said the suspension was related to new regulations introduced by the government.
The two partners have solicited bids for the sale of 6 mmscmd, one-third of the volume produced by KG-D6 from February 2023, according to the tender documents.
Users such as city gas utilities that convert gas to CNG and sell it to cars and pipe it to home kitchens for cooking purposes, power plants that use it to generate electricity, or fertilizer units that use it to produce urea. , a quote has been requested. A premium we are willing to pay for the JKM price.
JKM is the Northeast Asian spot price index for LNG shipped to Japan and South Korea. His JKM price in March is around US$21 per million British Thermal Units.
Bidders were asked to cite the variable “V” in the gasoline price formula “JKM + V”.
The starting bid for “V” was originally set at USD (minus) 0.30 per mmBtu, but was later changed to USD (minus) 0.42.
According to the bidding documents, each bidder was required to enter a bid equal to or greater than the starting bid.
The maximum valid bid for ‘V’ was originally US$5.01 per mmBtu, later changed to US$2.01. Bids exceeding this will not be accepted on the electronic bidding portal.
The gas price was supposed to be higher than the ceiling price or bid price set by the government for gas from deepwater fields.
Last May, Reliance-bp auctioned 5.5 mmscmd incremental gas from the new discovery of the KG-D6 block and benchmarked it against the same JKM gas marker.
Three-quarters of that volume was picked up by Reliance and its affiliates.
The price found at the electronic auction was a US$0.06 discount to the JKM (Japan-Korea Marker) LNG price.
Prior to that, the duo had sold 7.5 mmscmd of gas to JKM at a discounted price of US$0.18 per mmBtu.
Governments set caps or cap rates at which natural gas from difficult fields like deep water can be sold. This cap for the period October 1, 2022 to March 31, 2023 is US$12.46 per mmBtu.
Reliance has so far discovered 19 gases in the KG-D6 block. The largest of these lots, D-1 and D-3, began production in April 2009, while MA, the only oil field in the block, began production in September 2008.
The MA field ceased production in September 2018, while D-1 and D-3 ceased production in February 2020.
Since then, Reliance-bp has invested US$5 billion to produce three deepwater gas projects in Block KG-D6 (R-Cluster, Satellite Cluster and MJ). Gas demand to 2023.
(This article is not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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