Business Daily from THE HINDU group of publications
Thursday, Apr 19, 2007
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Business Daily from THE HINDU group of publications Thursday, Apr 19, 2007 ePaper |
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Petroleum Corporate - Outlook
Pratim Ranjan Bose
Kolkata April 18 Aided by abundant resources from its finds in Krishna-Godavari and Mahanadi NEC basins, Reliance Industries may initiate a price war in the natural gas market. While the development plan for NEC-25 block is yet to be ready, RIL's projected production of 80 million standard cubic metres a day from D6 block in KG basin beginning 2008-09 will double the natural gas supply in the country. While pricing arrangements are yet to be firmed up with the prospective customers, the company is confident that it would supply natural gas at prices competitive to the existing long-term floor rates of $4.75 per million metric British thermal unit (mmBtu). "The natural gas prices may come down to reasonable levels," Mr R.P. Sharma, President-LNG business of Reliance, told Business Line. "Our prices will definitely be competitive to the existing natural gas prices and reasonable enough compared to the LNG prices," he said when asked about an indicative price of gas to be marketed by RIL vis-à-vis the existing market scenario. The gas market in the country witnessed major rise in prices during the last two years.
Price trend
Natural gas prices moved up from a floor rate of $2.11 per mmBtu (APM price) to $4.75 for long-term contracts between 2004 and 2006. Prices witnessed further uptrend in 2007 to $5.7 per mmBtu when Panna-Mukta-Tapti joint venture entered into annual contracts with at least two consumers. LNG prices had shot up to $9 per mmBtu in the spot market. The power sector has already expressed concern at the rise in prices of natural gas and LNG.
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