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Home | Business | Reliance Affiliates Buy Bulk Of Kg D6 Gas

Reliance, affiliates buy bulk of KG-D6 gas

Reliance and its partner UK's BP Plc last week auctioned 5.5 million standard cubic meters per day of incremental gas from the newer discoveries in the KG-D6 block, benchmarking it to a gas marker

By PTI
Published Date - 09:14 PM, Mon - 10 May 21
Reliance, affiliates buy bulk of KG-D6 gas
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New Delhi: Billionaire Mukesh Ambani’s Reliance Industries Ltd and its affiliates have picked up more than three-fourths of the new gas volumes from the firm’s eastern offshore KG-D6 block which at current government dictated price will cost it less than half of the imported rate, sources said.

Reliance and its partner UK’s BP Plc last week auctioned 5.5 million standard cubic meters per day of incremental gas from the newer discoveries in the KG-D6 block, benchmarking it to a gas marker. Reliance’s oil-to-chemical (O2C) business unit picked up 3.2 mmscmd gas in the auction, three sources with direct knowledge of the development said.

India Gas Solutions (IGS) – a gas sourcing and marketing joint venture of Reliance and BP – picked up another 1 mmscmd, they said. The remaining volume was picked by Adani Gas (0.15 mmscmd), IRM Energy (0.10 mmscmd), GAIL (30,000 cubic meters per day) and Torrent Gas (20,000 cubic meters per day).

Sources said the price discovered in the e-auction came at a $0.06 discount to the JKM (Japan-Korea Marker) LNG price. At current prices, this translates into a price of USD 8-9 per million British thermal unit (mmBtu) but the buyers will end up paying less than half of this rate.

The government sets a cap or ceiling rate at which natural gas from difficult fields like deepsea can be sold. This cap for the period April 1, 2021 to September 30, 2021 is USD 3.62 per mmBtu.

“The lower cap means that even though the buyers are willing to pay higher rates, gas will be sold at a lower rate. The lower rate will benefit the buyer and give the producer a less remunerative price. More importantly, the government stands to lose millions of dollars in lesser royalty and taxes at lower rate,” one of the sources said.

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