Minimum US$10 is what Reliance wants for coal-seam gas

Minimum US$10 is what Reliance wants for coal-seam gas

Minimum US$10 is what Reliance wants for coal-seam gas

Reliance Industries Ltd. has modified its pricing model with the aim of setting a minimum tariff of US$10 for gas generated from coal seams.

Reliance Industries Ltd. has modified its pricing model with the aim of setting a minimum tariff of US$10 for gas generated from coal seams.

Reliance Industries Ltd. revised its pricing formula to reflect the evolving energy market, and as a result, is now seeking a minimum payment of US$10 for gas generated from coal fields.

Reliance has invited proposals from customers to generate 0.90 million standard cubic meters of gas per day form coal-bed methane (CBM) block SP (West)_CBM-2001/1 in Madhya Pradesh, corresponding to the tender that the firm released.

Users are requested to indicate the amount of the premium above 12.67 percent of the price of Brent crude oil as of the date of the survey. The price of gas will be 12.67 percent more than the monthly government-announced price for ordinary gas, plus premium "V" plus dated Brent. For January, the price established by the government is $7.82 per mmBtu. Bidders for 'V' must offer more than US$0.50, since Reliance has set the beginning bid price at US$0.50 per million British thermal units.

At the current Brent crude oil price of US$78 per barrel, the minimum gas price amounts to US$10 per MMBtu (12.67 percent of US$78 equals US$9.88 per MMBtu. To this is incorporated a minimum premium of US$0.50, which takes The gas price is roughly US$10.4 per MMBtu).

The tender document indicates that the e-auction is scheduled on January 31. The agreement will be in effect for one to two years, beginning on April 1. Reliance is requesting a revised price based on the auction in March 2022. It had looked for bids at a premium in that auction, calculated at 13.2 percent of the price of Brent crude oil.

Reliance sold 0.65 mmscmd CBM in March 2022 for US$8.28 per mmBtu more than the going rate for Brent crude oil. The price of a barrel of Brent oil was over $115 at the time. It is now down to $78 per barrel.

The state-owned Oil and Natural Gas Corporation (ONGC) had requested earlier this month a higher price for gas generated from CBM blocks in Jharkhand than the government-fixed rate of US$7.82 per mmBtu. For this, ONGC has solicited user bids. Gas from the North Karanpura Coal-Bed Methane (CBM) block in Jharkhand would be sold for three years at a rate of 0.05 mmscmd.

Users have been requested to indicate a premium that they are ready to pay in addition to the monthly domestic natural gas price, which is announced by the Petroleum Planning management Analysis Cell (PPAC) of the oil ministry, the tender document stated. Every month, PPAC sets a price for the majority of natural gas generated in the country. Ten percent of the monthly average of the basket of crude oil that India imports is represented by this price. This price is $7.82 USD per million British thermal units for the month of January.

In the ONGC offer, this amount is designated as the reserved gas price. For two thirds of the nation's gas production, the government controls prices; however, CBM gas has pricing flexibility, allowing sellers to pursue market rates. The gas that is recovered from the earth is either converted into compressed natural gas (CNG), power, or fertilizer. Sales from pipes to autos and household kitchens for culinary reasons.