For CBM gas auction, Reliance sets base price at $12.75 ; ONGC at $9.35

14 Feb 2023 , 08:37 AM

Natural gas extracted from coal seams is being auctioned off separately by Reliance Industries Ltd. and the government-owned Oil and Natural Gas Corporation (ONGC) at prices correlated to Brent crude oil prices. Reliance has set base price or reserve price at $12.75 per million British thermal units (BTU). ONGC has set base price at $9.35 per million BTU.

Reliance is looking for offers for the sale of 0.65 million standard cubic metres per day from CBM block SP(West)-CBM-2001/1 for a period of one year starting on April 1, 2023.

The starting bid price has been maintained at 15% of Brent crude price. E-bidding will take place on February 24 and will be priced at USD 12.75 per mmBtu at the current Brent price of USD 85 per barrel.

From the Jharkhand-based North Karanpura (NK) block, ONGC has made a three-year gas offer of 0.015 million metric standard cubic metres per day. 

While the price of natural gas produced from conventional fields is set by the government every six months, the price of gas from coal seams, or CBM, is free or determined by the market.

In its most recent bidding, ONGC is asking for a lower minimum price than it did when it asked for CBM from the Bokaro block in Jharkhand last year. According to the sale tender, ONGC requested bids for the sale of 0.20 mmscmd in June 2022 at a reserve or floor price of 14% of the price of date Brent crude oil plus USD 1 per million British thermal units.

Reliance sold CBM gas from the Madhya Pradesh block to companies like GAIL, GSPC, and Shell in March of last year for a significant premium.

Block SP-(West)-CBM-2001/1 gas from Reliance was sold for 0.65 mmscmd at a premium of USD 8.28 over Brent crude oil prices at the time. The company was looking for bids that were higher than the basic price of 13.2 percent for Brent crude oil.

With a base price of USD 15.18 per mmBtu and a premium bid of USD 8.28 from the state-owned gas utility GAIL and other companies, the final price amounted to USD 23.46 per mmBtu at the then-current Brent crude oil price of USD 115 per barrel.

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