Financial Daily from THE HINDU group of publications
Saturday, Nov 05, 2005
Financial Daily from THE HINDU group of publications Saturday, Nov 05, 2005 |
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Outlook ONGC aims to directly market Panna-Mukta-Tapti gas output — To focus on maximising price realisation from jt ventures Pratim Ranjan Bose
Kolkata , Nov. 4 FORCED to share heavy subsidies with oil marketing companies this year, ONGC will focus on maximising natural gas price realisation from joint ventures and new fields. To begin with, the company is gearing to directly market the entire 10.8-mmscmd (million metric standard cubic metres a day) production of the Panna-Mukta-Tapti (PMT) joint venture by the year-end. The plan is likely to invite stiff opposition from the biggest beneficiaries of the APM (administered pricing mechanism) regime, especially the north Indian power sector including NTPC and the gas transporting agency, GAIL (India). Though direct marketing has been allowed from last year, the joint venture was later forced to offer only 5 mmscmd of natural gas after GAIL protested that PMT's demand of nearly $4.2 per mbtu (million British thermal unit) against the APM price of $2.6 per mbtu, inclusive of transportation cost, was unrealistic and unaffordable for the user industry. Intervening in the issue, the Centre had finally asked PMT to offer 5 mmscmd of natural gas at $3.86 per mbtu for one year, to safeguard the interest of user industries, especially the power and fertiliser sectors. New clients: As the one-year contract period ends on March 31, 2006, PMT is gearing up to free 5 mmscmd for direct marketing. During the past few months, it has successfully roped in clients such as Gujarat State Petroleum Corporation , Gujarat Gas , and Indian Petrochemicals Corporation at $4.08 per mbtu. In fact, ONGC entered into an agreement with Rajasthan State Power Generation Corporation Ltd on Monday for sale of 1.5 mmscmd of gas at $4.6 per mbtu, for the proposed 330-MW power plant at Dholpur, after the 2007 monsoon. The supply will come from PMT's additional capacity of 5.5 mmscmd scheduled for production in 2007. "Internationally, natural gas prices are well over $10 per mbtu. We are successful in establishing our claim that prices over $4.50 are realisable in India too. We will approach the Petroleum and Natural Gas Ministry for complete freedom from administered price," a PMT official said. Beyond PMT: ONGC hopes to directly market at least 19 mmscmd of natural gas by 2007 and this would make a substantial impact on its profitability. While expecting the 5-mmscmd quota to be freed from administered price by March 2006, 2 mmscmd of gas will flow from G1 and G15 fields in KG basin by April 2006, taking the total availability for direct marketing to 13 mmscmd. While PMT capacity will increase by 5.5 mmscmd after the 2006 monsoon, the development of D1 and D33 fields in Mumbai offshore is expected to further enhance availability by the end of 2007-08.
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