The Hindu Business Line : Gas pricing: Panna-Mukta banking on Centre’s verdict

Panna-Mukta-Tapti (PMT) joint venture feels that the Centre’s verdict on pricing of Reliance’s KG basin gas will also vindicate its stand against GAIL, on pricing issues. PMT is jointly operated by ONGC, Reliance and British Gas, and producing approximately 17 million standard cubic meter of gas a day (mmscmd).

Taking a cue from the controversy over KG gas pricing issue, GAIL recently approached the Union Petroleum and Natural Gas Ministry seeking a review of PMT supplies to GAIL at $4.75 per million British thermal unit (mBtu).

The gas purchased by GAIL is sold primarily to core sector consumers at an administered price $2.1 per mBtu.

While comments were not available from GAIL, PMT sources said that the decision of the empowered group of ministers to maintain the sanctity of the production sharing contract (PSC) already entered into vindicates the pricing strategies of the joint venture.

“As per the PSC we can charge a maximum of $5.53 and $5.7 per mmBtu respectively for our production from Tapti and Panna-Mukta fields. As against this we are currently charging $4.75 per mmBtu to GAIL,” a PMT source told Business Line.

The joint venture has entered into a medium term contract with Gujarat Gas for selling gas at $5.7 per mmBtu in 2006.

On GAIL’s demand for making PMT’s entire gas production available at its disposal, PMT sources said that the PSU major was responsible for forcing the joint venture to go for direct marketing.

“It is GAIL, which had previously contested our pricing strategy determined by the terms and conditions of PSC. This had led us to enter in supply pacts with new customers,” the source said.

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