Barmer fields in Rajasthan will start commercial sale of natural gas from Saturday. Cairn and ONGC, its joint venture partner, are likely to sell gas at around $5/mBtu, the prevailing price in the region.
According to the joint venture sources, the gas pricing will be in line with the Government’s Gas Utilisation Policy and the Production Sharing Contractor provisions.
India today has broadly four major pricing regimes for domestically produced gas — administrative pricing mechanism (APM), non-APM, prior to licensing rounds (pre-NELP), and NELP (New Exploration Licensing Policy).
While administered and non-administered gas price is fixed by the Government, for those sold from NELP and pre-NELP blocks, it is governed in terms of the production sharing contract signed between the Government and the contractor.
The Rajasthan block (RJ-ON-90/1) in the North-West part of the country is awarded outside the oil and gas licensing regime (pre-NELP). For such blocks, natural gas is sold on the basis of pricing formulae provided in the respective production sharing contract.
Captive consumption
Compared with other producing gas fields like the Reliance Industries-operated Krishna Godavari Basin D6 block and the Panna-Mukta-Tapti fields, the quantity from the Raageshwari gas fields in Cairn India-ONGC’s Barmer block is small. The gas output from the field is expected to be ramped up to one million standard cubic metre a day in the near term. At present, gas produced from the Rajasthan block is used for captive consumption.
According to the industry, with output from the country’s largest gas fields in the KG D6 block falling to 16 mmscmd after hitting a peak of 60 mmscmd at 2009-end and no immediate discoveries going on stream, the dependence on expensive imported gas has been increasing. Therefore, even small quantities matter.
Against the consumption of 136.44 mmscmd during April 2012-January 2013, the availability of domestic gas was only about 96 mmscmd. The rest was imported.
Peak output
Saturday will see oil from Aishwariya field in the block flowing. At its peak, the field is expected to add 10,000 barrels to the current output from the block.
At present, it produces 175,000 barrels of oil a day from four fields — Mangala, Saraswati, Raageshwari (mostly gas) and Bhagyam.