New Delhi, June 13: Reliance Industries wants a price of $4.4-$4.6 per million British thermal unit (mmbtu) for its natural gas in the offshore Krishna Godavari basin.

The company today sought approval from the oil ministry for the price. The price is based on competitive bids from power and fertiliser companies.

A senior official said the RIL formula linked the price to UK’s Brent crude, the floor and ceiling being $25 and $65 per barrel, respectively.

The maximum price is $6.8 dollars per mmbtu for firms in Maharashtra and Gujarat. This includes transportation cost, marketing margin and a 4 per cent central sales tax.

The price is based on a year’s average of Brent crude price and the duration of the gas contract, which is three years.

Reliance CEO (oil and gas) P.M.S. Prasad, who made the presentation on the price, declined to give any further details on the gas formula. “We are at a very critical stage and I will not like to say anything on the issue.”

Prasad said, “We are in discussions with the oil ministry and the consumers. According to our contract a gas formula has to be approved by the ministry one year prior to beginning of the production. We expect our gas price formula to be approved by next month,” he said.

He, however, said the company was on schedule to produce the gas from July 2008. The initial output will be 32-40 million standard cubic meters per day (mmscmd).

The company expects to reach the peak output of 80 mmscmd in 2009. “We are trying to advance the peak production as much as possible,” Prasad said.

Anil Ambani, the younger brother of RIL promoter Mukesh, has moved court against the company for not honouring the contract for supplying gas to his company, Reliance Natural Resources, under a family settlement. The government has questioned the low price of gas in the settlement between the brothers.

The main objection is that the gas price of $2.34 per million British thermal unit (mmbtu) is substantially lower than the prevailing international price of around $8.