Participants in the auction came from a variety of gas-consuming industries, including fertilizer, municipal gas distribution, refineries, and aggregators. The procedure resulted in 38 successful bidders obtaining gas.
According to reports, the state-owned Indian Oil Corporation (IOC) has secured more over a third of the natural gas offered in the last auction of the KG-D6 gas by Reliance Industries Ltd and its partner bp of the UK.
Out of the 4 mmscmd of gas auctioned last week, IOC received 1.45 million standard cubic meters per day. The oil refining and marketing business, which was the highest bidder in the last two auctions of gas from Reliance-bp’s eastern offshore KG-D6 block, bid as an aggregator on behalf of fertilizer factories.
According to two people with firsthand knowledge of the situation, city gas providers such as Torrent Gas and Gujarat Gas obtained a total of 2.21 mmscmd of gas for conversion into CNG for sale to autos and piped to residential kitchens for cooking reasons.
Gujarat Gas was awarded 0.5 mmscmd, Torrent Gas 0.45 mmscmd, Adani Total Gas Ltd 0.29 mmscmd, IndianOil-Adani Gas Pvt Ltd 0.17 mmscmd, and Indraprastha Gas Ltd and Mahanagar Gas Ltd 0.30 mmscmd, respectively.
Participants in the auction came from a variety of gas-consuming industries, including fertilizer, municipal gas distribution, refineries, and aggregators. They stated that 38 successful bidders obtained gas through the auction procedure, which completed on November 24.
Reliance and BP auctioned out 4 mmscmd of gas from the Krishna Godavari basin block beginning December 1, 2023 last week.
According to the tender form, they invited users to propose a price tied to the Brent crude oil price. This was a break from the previous two auctions, the most recent of which took place in May of this year and saw gas auctioned linked to the worldwide gas benchmark, JKM.
Reliance-bp invited bidders in the most recent auction to name a premium ‘v’ they are ready to pay above and beyond 12.67% of the dated Brent crude oil price. The beginning bid price for ‘v’ has remained unchanged at USD 1.08 per million British thermal unit.
The gas price is USD 12.11 per mmBtu at the current Brent crude oil price of USD 80 per barrel (USD 10.136 per mmBtu plus ‘v’ of USD 1.98).
However, bidders will have to pay a lower price since the tender agreement states that the selling price would be the lower of the government-mandated maximum rate payable for gas from challenging fields such as deepsea and the price determined during the bidding process.
For a six-month period beginning October 1, the maximum price payable for gas from problematic fields is USD 9.96 per mmBtu. This means that even if Reliance-bp finds purchasers for 4 mmscmd of gas prepared to pay USD 12.11 per mmBtu, consumers will only be required to pay USD 12.11.
