Reliance Industries invites bids from buyers of coal gas
Reliance Industries on Wednesday sought bids from the buyers of coal gas produced from its CBM blocks in Madhya Pradesh at a minimum price of about $6 at the current oil price. It sought bids for 0.82 million standard cubic metres per day of gas from the Sohagpur coal-bed methane (CBM) block, according to the offer notice.
Bids have been sought for the supply of gas for one year beginning April 1, 2021.
The gas can be used in industries as as well as by city operators to supply CNG to automobiles and piped cooking gas to households.
Users have been asked to quote a percentage of Brent crude oil price they will be willing to pay for the gas. Reliance set 9.5 per cent of Brent rate as the base or minimum price and asked bidders to “enter bids that are higher than or equal to it”.
At the current price of Brent crude at $65 per barrel, the price of gas produced from coal seams, called CBM, comes to $6.17 per million British thermal unit (mBtu).
“A bidder shall be required to quote the variable denoted as ‘V’ in percentage terms as a positive number” of the dated Brent price, the notice said. Gas price will be “higher of (V per cent) x Dated Brent; or PPAC Price”, it said. PPAC price refers to the rate the government fixes every six months for gas produced mostly by state-owned firms such as ONGC. That price for the six months ending March 31, 2021 is $1.79 per mBtu.
Reliance started commercial gas production from the CBM blocks in March 2017 and reached the peak of 3 mmscmd before the end of 2018. CBM is natural gas stored or absorbed in coal seams and contains 90-95 per cent methane.