Business Daily from THE HINDU group of publications
Thursday, Jun 15, 2006
Business Daily from THE HINDU group of publications Thursday, Jun 15, 2006 |
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Corporate
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Regulatory Bodies & Rulings Industry & Economy - Petroleum Natural gas to RNRL: Details sought from RIL Richa Mishra
New Delhi , June 14 The Directorate General of Hydrocarbons (DGH) has sought details from Reliance Industries Ltd (RIL) on the latter's proposal of selling natural gas to Reliance Natural Resources Ltd (RNRL) at $2.34 per million British thermal unit (mmBtu). Official sources said, contrary to market rumours that the proposal has been rejected by the Petroleum Ministry, the DGH has been asked by the Ministry to examine the offer. The DGH has recently written to RIL seeking information on the proposal as well as certain other information including RIL's offer to NTPC. RNRL has been claiming that the arrangement between RIL and RNRL for sale and purchase of gas was made at the same time as the award of the gas supply contract by NTPC to RIL. Accordingly, the price of natural gas under the gas supply agreement between RIL and RNRL was the same as the price for gas supply by RIL to NTPC, it had argued. "Only after we receive the details from RIL we would be able to evaluate the offer in accordance with the provisions stipulated in the production sharing contract (PSC)," the official told Business Line. The Ministry has been maintaining that the evaluation process on RIL's proposal to RNRL for selling gas at $2.34 mmBtu from the Block KG-DWN-98/3 in Krishna Godavari Basin deepwaters is still in progress. The Government had received a proposal from RIL seeking its approval on gas price pursuant to the PSC. The Government, RIL and Niko Resources Ltd (contractors) have signed a PSC, which governs the rights and obligations of respective parties. The PSC provides that the formula or basis on which the prices was to be determined would be approved by the Government prior to the sale of natural gas to the consumers, sources said. All PSCs signed under the New Exploration Licensing Policy (NELP) provide for approval of gas price formula by the Government prior to the sale of the product. As per the PSC, the contractor would try to sell all natural gas produced and saved from the area at arms length price, which would be beneficial to the parties concerned. Besides, the PSC also provides valuation of natural gas on the basis of competitive arms length sales in the region for similar sales under common conditions. Elaborating, the official said the issue of profit petroleum would also have to be kept in mind, before reaching any decision.
More Stories on : Regulatory Bodies & Rulings | Petroleum | Reliance Industries Ltd
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