The Hindu Business Line : GAIL to buy gas from ONGC Mumbai offshore at market price

New Delhi, Jan. 18 GAIL (India) Ltd is all set to source 3.2 million standard cubic metres a day of gas from ONGC’s marginal fields in Mumbai offshore at a market related price. Sources told Business Line that ONGC is going to sell the gas at about $5.25-5.75 a British thermal unit (mBtu) to GAIL.

The two companies are likely to ink a commercial agreement later this month, sources also said. “The C-series marginal field in Mumbai offshore is viable only at a market-related price,” they added.

The market-related price normally depends on demand and currently, the price is around $5.5-6 per mBtu, excluding transmission charges, taxes, marketing margins and charges for services. In fact, the market price is 45-50 per cent higher than the administered price decided by the Government.

“This gas from ONGC would help GAIL partially meet the deficit in demand,” sources said. Gas demand in the country is about 150-170 million standard cubic metres, while supply is about 96-110 million standard cubic metres. The gas from the C-series field, located 60 km west of Daman in the Tapti Daman block of Mumbai offshore, will be available to GAIL from 2009, after the completion of the first phase of the project sometime before the monsoon sets in.

After the completion of the first phase, the field will produce little over 2 million standard cubic metres/day of gas and the peak production will be more than 3 million standard cubic metres, sources said adding that “though the field was discovered in the 1990s, it became viable only recently due to market-determined prices for natural gas”. ONGC is investing close to Rs 3,990 crore in development of these fields.

Besides the joint venture fields of Panna-Mukta-Tapti, GAIL also sources gas from Ravva satellite, re-gassified liquefied natural gas (R-LNG) on term basis from Petronet LNG Ltd (PLL), and spot R-LNG.

GAIL is supplying nearly 80 million standard cubic metres as fuel to power plants, as feedstock for gas-based fertiliser plants and to over 500 other small, medium and large industrial units to meet their energy and process requirements.

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