Gujarat govt company, GSPC, takes cue from Reliance Industries, seeks imported LNG price for KG basin gas

"Even if bid value of 'V' is negative, floor gas price will always be USD 8.50 per mmBtu," GSPC said.

A year back, RIL had sought to price gas it will produce from below coal seams, called coal-bed methane (CBM), from its Sohagrpur blocks in Mahdyra Pradesh at 12.67 per cent of the average price of crude oil imported into Japan (called Japan Crude Cocktail, or JCC) plus USD 0.26 per mmBtu.

Petronet pays RasGas of Qatar a price of 12.67 per cent of JCC, besides incurring a USD 0.26 per mmBtu cost on transporting the gas in ships.

Unlike GSPC, RIL did not set any floor or cap. At a USD 100 per barrel JCC average, CBM was to cost USD 12.67 per mmBtu plus USD 0.26 per mmBtu, totalling USD 12.93 per mmBtu.

GSPC, which sought bids by March 12, said it will charge an additional marketing margin of Rs 10.21 per mmBtu while the consumer will also have to bear all taxes, duties, levies on sale of gas as well as transportation cost and duties and taxes thereon.

RIL then extended this pricing formula for its eastern offshore KG-D6 gas when the current USD 4.205 per mmBtu rate expires in March 31, 2014.

While the Oil Ministry has accepted a complex international hub-based pricing formula suggested by Rangarajan Committee for all gas produced in the country, GSPC said it as per Production Sharing Contract (PSC) provisions is seeking to discover gas price through competitive arms

... contd.