Reliance seeks minimum USD 10 for coal-seam gas
Reliance Industries Ltd is seeking a minimum USD 10 rate for the gas it plans to produce from coal seams, as it altered its pricing formula to reflect the changed energy scenario. Reliance has sought bids from users for 0.90 million standard cubic meters per day of gas it will produce from coal-bed methane (CBM) block SP (West)_CBM-2001/1 in Madhya Pradesh, according to a tender floated by the company.
Users have been asked to quote a premium they are willing to pay over and above 12.67 per cent of the Dated Brent crude oil price.
Gas price shall be higher than 12.67 per cent of Dated Brent plus premium 'V'; or the government-declared monthly price for conventional gas. The government-mandated price for January is USD 7.82 per mmBtu.
Reliance has set the starting bid price of 'V' at USD 0.50 per million British thermal units — bidders have to quote 'V' higher than USD 0.50.
At the current Brent crude oil price of USD 78 per barrel, the minimum gas price comes to USD 10 per mmBtu (12.67 per cent of USD 78 is USD 9.88 per mmBtu. Added to this is a minimum premium of USD 0.50, which takes the gas price to about USD 10.4 per mmBtu).
E-auction is planned for January 31, the tender document showed.
The contract duration is for 1 to 2 years beginning April 1.
The pricing Reliance is seeking is modified from the March 2022 auction. In that auction, it had sought bids at a premium over the base of 13.2 per cent of Brent crude oil price.
In March 2022, Reliance sold 0.65 mmscmd of CBM at a USD 8.28 per mmBtu premium over the prevailing Brent crude oil price. Brent oil was trading above USD 115 per barrel at that time. It has now slipped to USD 78 a barrel.
