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Homechevron_rightBusinesschevron_rightReliance and ONGC to...

Reliance and ONGC to separately auction natural gas, seeking $12.75 and $9.35 per unit

coal mine

Mukesh Ambani's Reliance Industries Ltd and state-owned Oil and Natural Gas Corporation (ONGC) are separately auctioning natural gas extracted from coal seams.

CBM is an unconventional form of natural gas that can be used to produce electricity and as feedstock for fertilisers. It is also used for industrial purposes like cement production, rolling mills, steel plants, and methanol production. It can also be compressed into CNG to use as fuel in vehicles or piped to household kitchens for cooking.

Reliance is seeking a minimum of $12.75 per million British thermal unit for coal bed methane (CBM) from a block in the Shahdol district of Madhya Pradesh. ONGC is seeking $9.35 for fuel from North Karanpura in Jharkhand, revealed tender documents.

Reliance has sought bids for the sale of 0.65 million standard cubic meters per day from CBM block SP(West)-CBM-2001/1 for one year beginning April 1, 2023. e-bidding will happen on February 24. The tender document asked bidders to quote a variable 'v' as a percentage of dated Brent crude oil price. Starting bid price has been kept at 15% of Brent. As per the current rate, this translates to $12.75 per mmBtu.

ONGC has asked bidders to quote a premium 'p' as a percentage of Brent price and is offering 0.015 mmscmd of gas from North Karanpura (NK) block in Jharkhand for three years. The reserve or bid start price has been kept at 11% of Dated Brent price ($9.35 per mmBtu at Brent oil price of $85 per barrel).

The state-owned corporation said the price of gas shall be higher than the reserve gas price plus quoted premium (p) or floor price plus quoted premium (p). The floor price will be USD 1 per mmBtu higher than the domestic gas price (which currently is USD 8.57 per mmBtu). "The e-auction of ONGC gas will take place on March 2," said ONGC.

The minimum price ONGC is seeking in the latest tender is less than what it had sought for CBM from a Bokaro block in Jharkhand last year. Bidders will have to quote a premium they are willing to offer over that reserve price.

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TAGS:natural gas auctionRelianceONGC
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