CHENNAI: State-run oil and gas explorer and extractor Oil and Natural Gas Corporation (ONGC) has invited bids for the sale of around two million standard cubic meters per day of natural gas produced from its KG basin fields.
According to the tender document floated by the company, it has plans to sell natural gas produced on its KG-DWN-98/2 block, which is located next to the Reliance Industries Ltd (RIL)-BP Plc-operated KG-D6 fields.
It will begin these operations from June-end. Earlier this month, the RIL-BP combine had sought bids for the sale of 5.5 mmscmd of additional natural gas that will become available for sale from their KG-D6 block.
ONGC’s initial tender calls for the sale of two million standard cubic metres per day of gas through an e-auction, but industry sources say such sales are expected to continue or accelerate.
ONGC has called for bids indexed to Brent crude oil prices (currently trending at $63 per barrel). It has also sought bids at a minimum of 10.5 per cent of the three-month average Brent crude oil price, which comes up to around $6.6 per million British thermal unit (pmBtu).
However, the government mandated ceiling for gas prices from the deep sea seas are currently only set at $3.62 pmBtu for the six-month period starting April 1, 2021. Officials note that these prices will be revised upwards once this six-month period is over, with the next cap-level likely to be around $5.5 pmBtu.
The e-auction is slated for April 23 and the gas supply will start from late April or early May, ONGC’s tender says, adding that bidders will have to quote a price linked to the Platts JKM-LNG benchmark price assessment for spot physical cargoes.
Bids can be in the range of JKM minus $0.3 pmBtu and JKM plus $2.01 per mmBtu—the same benchmark RIL-BP had used in February.