RIL, BP seek government road map on gas pricing

New Delhi, April 15 (IANS) British oil major BP plc and Reliance Industries Ltd (RIL) Monday sought a clear roadmap from the government on natural gas pricing.

BP Group chief executive Bob Dudley and RIL chairman Mukesh Ambani met Montek Singh Alhuwalia, deputy chairman of the Planning Commission, and discussed the issue of new price for gas from the RIL consortium-operated KG-D6 fields which will be applicable from April 2014.

The current price of gas from KG-D6 is $4.2 per million metric British thermal unit (mmBtu).

“They are very concerned, they are very keen that the government comes out with a view (on gas pricing). That process is under way. I wasn’t able to tell them what we are going to decide,” Ahluwalia told media persons after the meeting

“I did say that there is an EGoM (Empowered Group of Ministers) and it will be considering the Rangarajan Committee recommendations,” said Ahluwalia.

The committee headed by C. Rangarajan, chairman, economic advisory council to the prime minister, has recommended that a producer price be derived by averaging international hub prices with cost of imported liquefied natural gas (LNG) for the next five years. The price by this formula comes to $8-8.5 per mmBtu.

Both companies have reservations about doubling the gas price to $8-8.5 per mmBtu, which from their viewpoint will be inadequate coverage for bringing high-risk deep sea discoveries to production.

Ahluwalia said the two company heads also briefed him about their assessment of production they could get from KG-D6, output from which this month has fallen to an all-time low of 16.5 million standard cubic metres per day.

The consortium, which has Niko Resources as the third partner, forecasts a production increase of at least 30 mmscmd if satellite and smaller fields surrounding the currently producing main fields are brought into production.

A new area – MJ1 – discovered in the existing producing gas fields in this block has shown signs of having more gas. Initial assessment, based on drilling started in March, showed that the area could have substantial gas reserves.

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