RIL, BP seek buyers for KG gas
Reliance Industries Ltd and its partner BP Plc of UK have sought bids for the sale of 5.5 million standard cubic meters per day (mscmd) of additional natural gas that will be available for sale from their eastern offshore KG-D6 block.
The e-auction is slated for April 23 and the gas supply will start from late April or early May, according to the tender document.
Bidders will have to quote a price linked to Platts JKM (Japan Korea marker), the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes.
The lowest bid that can be placed is JKM minus $0.3 per million British thermal unit (mBtu). The highest acceptable bid would be JKM plus $2.01 per mBtu. This is the same benchmark the RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block.
At current price, the lowest price for the 5.5 mscmd of gas that RIL-BP are auctioning comes to near $6.5 per mBtu. But they will be entitled to a maximum of $3.62 per mBtu ceiling fixed by the government for a six-month period to September 30.
The consortium of RIL and BP Exploration (Alpha) Ltd (a unit of BP Plc) “is developing deepwater gas fields viz the R Cluster (D34), MJ (D55) and Satellites & Other Satellites (D2, D22, D29 and D30) in the KG D6 block”, the tender document said.
The gas to be produced from the fields has been granted marketing and pricing freedom but this is subject to a ceiling price that the government fixes every six month.