NEW DELHI: Mukesh Ambani-led-Reliance Industry Ltd is seeking a minimum of $14 for selling natural gas being produced from coal seams in a block in Madhya Pradesh.
The company in its notice inviting offer said it sought bids from users for the sale of 0.65 million standard cubic meters per day of gas from its coal-bed methane (CBM) block SP-(West)-CBM-2001/1 for a one-year period.
“A bidder shall be required to quote the variable denoted as ‘V’ in USD per million British thermal unit terms as a positive number pursuant to the gas price formula” of “14% x dated Brent + V,” the NIO reads.
The company has kept the starting ticker for ‘V’ at $1 per mmBtu, which means bidders will have to quote at least $1 plus 14% of dated Brent crude oil to buy the CBM gas. Currently, Brent crude oil is trading above $92.5 per barrel and at this price, the floor rate for Reliance gas comes to $13 per mmBtu.
Adding ‘V’ of $1, the minimum price comes to $14 per mmBtu. The government dictated price for gas produced by state-owned firms such as ONGC is $2.90 per mmBtu.