The Hindu Business Line : GAIL ready to buy, market entire supplies of 2 fields

GAIL (India) Ltd is willing to buy and market the 11 million metric standard cubic metres per day (mmscmd) of natural gas produced in the Panna-Mukta and Tapti gas fields, which are operated by a joint venture of ONGC, Reliance Industries Ltd, and British Gas.

When contacted, Dr U.D. Choubey, Director (Marketing), said: "Since the purchase price from these fields has now been fixed, GAIL has already expressed its intent to buy and market entire supplies as the Government nominee."

This mechanism, according him, would prove beneficial for all, as duplication of infrastructure could be avoided.

Regarding the allegations that GAIL was not keeping its commitment of picking up its allocated quantity of six mmscmd from the gas fields, sources told Business Line: "The recent revision of price was not acceptable to NTPC, one of the consumers."

The production-sharing contract for the Tapti and Panna-Mukta fields stipulates that on completion of seven years from the date of the first delivery of gas from these fields, the seller (the consortium) would have the option of revising the ceiling price.

Hence, a substantial increase of 75 cents from $3.11 mmBtu to $3.86 mmBtu was done, the sources added.

NTPC has refused to purchase its stake of about two mmscmd at $3.86 million mmBtu.

In view of the peak summer requirement for power sector, GAIL is keeping 2.1 mmscmd of supply for NTPC.

However, GAIL would offer this quantity of gas to other customers in case NTPC does not take it.

According to the sources, one of the consortium members was offering significantly lower price to NTPC in Gujarat for supply of gas from its KG Basin field against the price quoted for gas from the Panna-Mukta and Tapti fields.

On reviewing the situation, the Ministry of Petroleum and Natural Gas directed that six mmscmd would continue to be supplied to core sector customers at the revised price of $3.86 mmBtu and that the principals of the joint venture fields could directly market the remaining five mmscmd using GAIL infrastructure.

"We have increased our offtake to four mmscmd with fertiliser and power customers other than NTPC. Besides, with the redistribution of NTPC share, the offtake is expected to go up further as some of the fertiliser plants are resuming operations after having shut down during the beginning of April 2005," the sources said.

Since the price of $3.86 per mmBtu is valid for one year, the sources were non-committal on whether GAIL would also have to pay a higher price from April 2006 if is so decided by the joint venture partners.

"At the last meeting with the Government, it was agreed that the current price would be for one year, after which it would be reviewed."

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