The Hindu Business Line : GAIL gets rights to market entire Panna-Mukta output

Snapshot
GAIL has been allowed to market the entire 17 mmscmd gas produced.
It is now allowed to levy a marketing margin of $0.12 per mBtu on the entire output from April 2008.

Our Bureau

New Delhi, Nov. 27

GAIL (India) Ltd is understood to have got the rights to market the entire gas produced from the joint venture partners — Reliance Industries Ltd, British Gas and ONGC – from the Panna-Mukta-Tapti (PMT) fields.

According to official sources, the Petroleum Ministry has decided to nominate GAIL to market the PMT gas from the next financial year (April 2008).

GAIL officials declined to comment stating that the company has not received any formal communication as yet. This decision is expected to push the company’s revenues by about Rs 5,000 crore.

Marketing margin

GAIL has been allowed to market the entire 17 mmscmd gas produced from these fields. Currently, GAIL has the right to market only 4.8 mmscmd from the fields and is not entitled to marketing margins.

The marketing and transmission company is now allowed to levy a marketing margin of $0.12 per million British thermal unit (mBtu) on the entire output of about 17 mmscmd from April 2008. This marketing rights would increase GAIL’s marketing margin by about Rs 100 crore annually, while its transportation margin would rise by about Rs 450 crore.

Last March, the Ministry had allowed the joint venture partners to directly market 5.6 mmscmd gas from these fields for two years ending March 31, 2008, and give the remaining 4.8 mmscmd to GAIL.

Violating orders

While the gas output from these fields has increased to around 17 mmscmd, with the joint venture partners increasing their direct sale of gas, GAIL’s share remained at 4.8 mmscmd. The Ministry also found that the joint venture partners had entered into long-term gas supply contracts with customers, violating its March 2006 order of direct gas sales up to March 31, 2008.

Since 2006-07, GAIL gets 4.8 mmscmd of PMT gas at $4.75 per mBtu. Indications are that GAIL will get the entire PMT output at $5.7 per mBtu.