Industry & Economy
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Petroleum
Secys panel on KG gas pricing proposed
Our Bureau
New Delhi
June 20
The Petroleum Minister, Mr Murli Deora, on Wednesday indicated that he would prefer a panel of secretaries to look into the issue of pricing of the Krishna Godavari Basin gas.
The Mukesh Ambani-led Reliance Industries Ltd (RIL) has already submitted a gas price formula for its KG gas to the Ministry for its consideration.
RIL was expecting to firm up the formula by next month, as it was looking at starting gas production from its KG Block in July 2008, and a formula has to be in place a year prior to production.
However, as per industry sources, the Anil Ambani group company and some of the other consumers have been crying foul over the formula.
Speculation is that RIL's gas will cost between $4.4 and $4.6 per million British thermal unit (mBtu) at Kakinada. This price excludes the marketing margin, transportation tariff and four per cent Central Sales Tax.
The company made a presentation before the Petroleum Ministry on Wednesday on its gas-pricing formula based on quotes it had invited from main consumers, power and fertiliser companies. Subsequent to the Petroleum Ministry's approval, the price of the gas would be determined.
Indications are that the formula links the price to Brent crude oil price, with a floor of $25 per barrel and a cap of $65 per barrel. The price will be calculated based on a year's average of Brent crude oil price.
The ADA Group's Reliance Natural Resources Ltd has questioned the high floor price for gas from the KG basin in Andhra Pradesh fixed by RIL.
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