Reliance Industries and its partner bp of the UK have offered for auction 6 million standard cubic metres per day of more gas from their KG-D6 block as the partners bring the deepest field in the block to production.
The two partners will on May 19 e-auction 6 mmscmd of gas, whose supplies will start from June 1, according to a tender document.
Bidders have been asked to quote a variable ‘v’ over and above the JKM price, the spot market benchmark for liquefied natural gas (LNG) delivered to Japan and South Korea.
The starting bid price is V = $-0.06 (minus 0.06) per mmBtu. “Each bidder is required to enter bids that are higher than or equal to the starting bid price,” the tender document said, adding the maximum value of ‘v’ that would be accepted will be $0.75 per mmBtu.
The JKM price is around $11.5 per million British thermal units at present. The start price of the auction translates into a gas price of $11.44 per mmBtu and at the ceiling, it would result in a price of $12.25.
Bidders can seek volume for a tenure of 3 to 5 years.
Reliance-bp had last month sold 6 mmscmd of gas to buyers like state-owned Indian Oil Corporation (IOC), Adani-Total Gas Ltd and Shell. IOC walked away with almost half of the 6 mmscmd of gas sold in an e-auction on April 12 while state-owned gas utility GAIL bought 0.7 mmscmd, Adani-Total Gas Ltd 0.4 mmscmd, Shell 0.5 mmscmd, GSPC 0.25 mmscmd and IGS another 0.5 mmscmd.
In that auction too, bidders were asked to quote variable ‘V’ in the gas price formula ‘JKM + V’. But this price was subject to the government-notified ceiling price.
