Reliance Industries Ltd has sold three-fourth of the gas from its coal seams in Madhya Pradesh to an affiliate of the company at a price of just over $6 per million British thermal unit (mBtu) 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 metres per day (mscmd) out of the 0.82 mscmd 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 mscmd, while 0.03 mmscmd was picked up by Reliance Gas Pipeline — the entity that transports gas from the coal-bed methane (CBM) blocks in Madhya Pradesh to consumers.
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 (mBtu).
“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.
