New Delhi, Aug. 13: State-owned explorer ONGC has sought marketing and pricing freedom to make natural gas viable as it plans to put one trillion cubic feet discovered in the Gulf of Kutch to commercial use.
A senior ONGC official said the PSU had asked the government to "give pricing and marketing freedom". At the current price of $2.48 per million British thermal units (mBtu), the Kutch gas is unviable.
According to the official, if gas can be imported at $6-$7 per mBtu, domestic producers should be allowed to charge similar rates. The move will also save precious foreign exchange and help the government's Make in India initiative.
In a communication to the oil ministry, the state-owned explorer has sought a decision at the earliest so that it can go ahead with its investment in the Kutch region.
In October 2014, the government had announced a formula that calculated the local prices by using the weighted average of rates prevalent in the gas-surplus economies of US, Mexico, Canada and Russia.
The price has to be revised every six months.
ONGC, the country's largest gas producer, has drawn up plans to start producing gas from the Gulf of Kutch in the next two-three years. It accounts for around 60 per cent of the current output of 90 million standard cubic metres per day.
Some of the discoveries made in the Gulf of Kutch include the GK-OSN 2009/1, GK-OSN 2009/2, GK-OSN 2010/1, GK-OSN 2010/2, GK-DW-1 and GS OSN-2004/1. The company has already invested around $2 billion in the entire exploration of the basin.
The company has reportedly discovered more than one trillion cubic feet (tcf) of natural gas in the Kutch offshore basin and is trying to establish 0.5 tcf of additional fuel.
Seven of the 26 sedimentary basins in India are currently under production. The Cauvery Basin was the last basin to come on stream in 1985.
The new Kutch offshore basin would provide a respite to ONGC at a time production has been declining from most of its mature and ageing fields, where the company has deployed enhanced oil recovery techniques to maintain production.
Of the country's 26 sedimentary basins, only seven have commercial production of oil and gas at present. Assam, Cambay, Mumbai Offshore, Rajasthan, Krishna-Godavari, Cauvery and Assam-Arakan Fold Belt are the producing basins.
India has set a target of natural gas contributing 15 per cent to its energy mix from the current level of 6.5 per cent. This will involve the public sector unit ramping up its production, and pricing would be an important factor for the commercial viability of the output.
HPCL deal advisers
PwC, JM Financial and ICICI Securities are among the five consultants vying to become the transaction adviser to the government's over Rs 33,000-crore stake sale in HPCL to ONGC.
EY and Rothschild (India) Pvt Ltd are the other two who have submitted expressions of interest (EoI) to the department of investment and public asset management's (Dipam) invitation to professional consulting firms and merchant bankers for managing the disinvestment process.
Dipam is looking to appoint one adviser for the strategic sale as also a law firm with expertise in mergers and acquisitions.
Cyril Amarchand Mangaldas, Crawford Bayley & Co, Luthra & Luthra, Suman Khaitan & Company and Hammurabi & Solomon Partners are in the race for legal consultants.
Sources said Dipam had invited the bidders to make a presentation on Friday after which it would open the price bids.