Oil and Natural Gas Corporation (ONGC) has relaunched a tender to sell gas from its KG fields at a higher price of USD 15 per mmBtu as it looks to capitalise on a global surge in energy prices.
The firm sought bids for the sale of 0.75 million standard cubic meters per day of gas for one year from the KG-DWN-98/2 (KG-D5) fields in the Bay of Bengal, according to the tender document.
The firm asked users to quote a premium they are willing to pay over and above the reserve gas price of 14 per cent of Brent crude oil price plus USD 1 per million British thermal unit.
The reserve price at the current ruling Brent oil price of USD 101 per barrel comes to more than USD 15 per mmBtu.
The applicable sale price shall be lower than the gas price bid or the government-dictated ceiling rate for gas produced from deepsea fields, it said.
The government fixes the price of domestically produced natural gas twice a year - the rate for gas from deepsea fields for six months beginning April 1 is USD 9.92 per mmBtu.
This rate is expected to be revised upwards in October, reflecting a surge in international energy prices following Russia's invasion of Ukraine.
ONGC had in April last year sought bids for the sale of 2 mmscmd of gas from the KG-D5 block but had to abort the sale after the move was challenged in the court.
That tender was for the sale of 2 mmscmd of gas for a duration of 3 to 5 years at Odalarevu in East Godavari district of Andhra Pradesh, which is connected to state gas utility GAIL's KG basin pipeline network as well as PIL's East-West Pipeline which is connected to KG basin network and further to Gujarat gas grid.
In that tender, bidders were required to quote a premium over 10.5 per cent of Brent.
Last year, Reliance Industries and its partner BP Plc of UK sold 5.5 mmscmd of additional natural gas from KG-D6, which sits next to ONGC's KG-D5, at a rate linked to Platts JKM (Japan Korea marker) - the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes.
This is the same benchmark RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block.
ONGC's KG-D5 block is expected to have a peak production rate of 15.25 mmscmd of natural gas and 80,000 barrels per day of oil.
The company is likely to come out with another tender later this year for the sale of 5 mmscmd of gas from next year.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app