Reliance Industries Ltd is seeking a minimum $10 rate for the gas it plans to produce from coal seams, as it altered its pricing formula to reflect the changed energy scenario.

Reliance has sought bids from users for 0.90 million standard cubic meters per day of gas it will produce from coal-bed methane (CBM) block SP (West)_CBM-2001/1 in Madhya Pradesh, according to a tender floated by the company.

Users have been asked to quote a premium they are willing to pay over and above 12.67 per cent of the Dated Brent crude oil price.

Gas price shall be higher than 12.67 per cent of Dated Brent plus premium 'V'; or the Government-declared monthly price for conventional gas. The Government-mandated price for January is $7.82 per mmBtu.

Reliance has set the starting bid price of 'V' at $0.50 per million, British thermal units - bidders have to quote 'V' higher than $0.50.

At the current Brent crude oil price of $78 per barrel, the minimum gas price comes to $10 per mmBtu (12.67 per cent of $78 is $9.88 per mmBtu. Added to this is a minimum premium of $0.50, which takes the gas price to about $10.4 per mmBtu).

E-auction is planned for January 31, the tender document showed. The contract duration is for 1 to 2 years beginning April 1.

The pricing Reliance is seeking is modified from the March 2022 auction. In that auction, it had sought bids at a premium over the base of 13.2 per cent of Brent crude oil price.

In March 2022, Reliance sold 0.65 mmscmd of CBM at a $8.28 per mmBtu premium over the prevailing Brent crude oil price. Brent oil was trading above $115 per barrel at that time. It has now slipped to $78 a barrel.

Earlier this month, state-owned Oil and Natural Gas Corporation (ONGC) sought a premium over the Government-dictated gas price of $7.82 per mmBtu for the gas it plans to produce from a CBM block in Jharkhand.

ONGC sought bids from users for the sale of 0.05 mmscmd of gas from the North Karanpura coal-bed methane (CBM) block in Jharkhand for three years. Users have been asked to quote a premium they are willing to pay over and above the monthly domestic natural gas price that the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) notifies, the tender document showed.

PPAC every month declares a price for the majority of domestically produced natural gas. This price is 10 per cent of the monthly average of the basket of crude oil that India imports. For the month of January, this price comes to $7.82 per million British thermal units.

This price in the ONGc tender has been marked as a reserve gas price.

While the government sets prices for two-thirds of the gas produced in the country, CBM gas enjoys pricing freedom where sellers are allowed to discover the market rate.

Gas extracted from below ground is used to produce electricity, make fertilisers or turned into CNG for sale to automobiles and piped to household kitchens for cooking purposes.