Firms such as Cairn, ONGC & Videocon may be impacted
The ministry of petroleum and natural gas has sought the law ministry’s views on whether the natural gas pricing regime put in place since November 1 of $5.61/mmBtu could also be applicable to fields currently exempted. There are about 17 gas fields, allocated prior to the launch of the new exploration licensing policy (NELP), where the commodity is sold on pre-approved prices and the new gas pricing does not cover them.
“We have written to the law ministry seeking a view on the issue. A decision would be taken by the nodal ministry post the opinion comes,” a senior official at petroleum ministry told FE. The petroleum ministry’s move follows an October 18 decison by the Union Cabinet that gave it approval to put in place the revised gas pricing regime for domestic fields based on global indices. The panel of secretaries that proposed the revamped Rangarajan formula, later okayed by the Cabinet, also suggested that the fields under pre-approved regime should also be brought under the uniform pricing regime.
For example, Cairn India and its PSU joint venture partner ONGC sells marginal volumes of natural gas (about 0.25 mmscmd) from Raageshwari fields in the Barmer block of Rajasthan. Gujarat Narmada Valley Fertilizers is billed $8.40/mmBtu by the explorers for this gas. Cairn India and ONGC are targeting to tap and commercially sell gas from another field — Kaameshwari — in the same block in Rajasthan. Similarly, natural gas produced from Cairn-ONGC-Videocon-run Ravva satellite fields in the KG basin is sold at $3-4.5/mmBtu. PSU gas marketing and trading company GAIL (India) buys and markets the gas produced from Ravva satellite fields.
On October 18, the government said that the revised gas price would be applicable to all gas produced from nomination fields given to ONGC and OIL India, NELP blocks, such pre-NELP blocks where production sharing contract (PSC) provides for government approval of gas prices and CBM blocks. However, the gas fields are exempted where the prices have been fixed contractually for a certain period of time, till the end of such period; where the PSC provides a specific formula for natural gas price indexation/fixation, or such pre-NELP blocks where government approval has not been provided under the PSC.