Reliance Industries Ltd has sold three-fourth of the gas from coal seams in Madhya Pradesh to an affiliate of the company at a price of just over USD 6 at current oil prices.
Reliance Industries Ltd has sold three-fourth of the gas from coal seams in Madhya Pradesh to an affiliate of the company at a price of just over $6 at current oil prices.
India Gas Solutions Private Limited, a 50: 50 joint venture of RIL and UK's bp, bought 0.62 million standard cubic meters per day out of 0.82 mmscmd gas bid out in an auction last week, three people with knowledge of the matter said.
State-owned gas utility GAIL India Ltd cornered 0.17 mmscmd while 0.03 mmscmd was picked by Reliance Gas Pipeline - the entity that transports gas from the coal-bed methane (CBM) blocks in Madhya Pradesh to consumers.
The price bid was 9.2 percent of the prevailing rate of Brent crude oil price, which translated into a rate of over $6 per million British thermal units at current oil prices, they said.
An email sent to Reliance for comments remained unanswered.
Reliance had last month bids for 0.82 mmscmd of coal gas from the Sohagpur coal-bed methane (CBM) block for one year beginning April 1, 2021, according to a notice inviting offer (NIO).
Users were asked to quote a percentage of Brent crude oil price they will be willing to pay for the gas. Reliance initially 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." It later lowered the base price to 8.7 per cent of Brent.
At the current $67 per barrel Brent crude oil price, the price of gas produced from coal seams, called CBM, comes to $6.1 per million British thermal unit (mmBtu).
"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.
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