The Hindu Business Line : Panna-Mukta-Tapti joint venture plans contract with Gujarat Gas

The ONGC-operated Panna-Mukta-Tapti joint venture is about to create a new benchmark in natural gas price in India. The joint venture is planning to enter into a gas sales contract (GSC) with Gujarat Gas Company Ltd (GGCL) — a city distributor — for selling 0.7 million standard cubic metres per day (mscmd) till March 2008 at a price of $5.7 per million British thermal unit (mBtu).

PMT had entered in a slew of GSCs last year for firm supply of 5 mscmd to GAIL, 0.9 mscmd to Torrent Power and 1.5 mscmd to Rajasthan Vidyut Nigam at a price of $4.75 per mBtu effecting an increase in the floor price of natural gas in the country.

PMT is a joint venture between British Gas, Reliance and ONGC. GGCL is held close to 65 per cent by British Gas Group and registered a net profit of approximately Rs 90 crore in 2005.

In a notice to the stock exchange, GGCL today said the board of directors of the company allowed GGCL to enter into a firm agreement with PMT to purchasing 0.7 mscmd gas. The firm commitment would replace the company's present spot purchases of similar quantity from PMT.

While the company did not divulge pricing details, sources said that GGCL agreed to pay $5.7 per mBtu, which is higher than the spot purchase price of $4.87 per mBtu. The higher price is paid to ensure firm supplies in the face of existing supply constraints.

The company has already entered into long agreement with BG for supply of its enhanced share of 1.65 mscmd from PMT beginning third quarter of 2007. The enhanced share will accrue from 6 mscmd capacity augmentation plan currently under implementation by PMT.

Post-augmentation, PMT will have a capacity of 17 mscmd.