Reliance Industries and its partner BP plc of UK will this month offer for sale more natural gas from its KG-D6 block to users as it prepares to put into production second wave of discoveries in the eastern offshore block.
Reliance-BP is likely to offer as much as 5 million standard cubic meters per day (mmscmd) of natural gas for bidding from newer discoveries in KG-D6 in next few days, sources aware of the development said.
The volume to be offered is the same as the one the company bid out in November last year. E-mails sent to Reliance and BP for comments remained unanswered. Like in the previous auction, Reliance-BP will seek bids from potential users for the 5 mmsmcd of natural gas it plans to produce from the R-Cluster Field in KG-D6 block from mid-2020.
Bidders will have to quote a price (expressed as a percentage of the dated Brent crude oil rate), supply period and the volume of gas required. Dated Brent means the average of published Brent prices for three calendar months immediately preceding the relevant contract month in which gas supplies are made.
Sources said Reliance had in November set a floor or minimum quote of 8.4 per cent of dated Brent price — which meant that bidders had to quote 8.4 per cent or a higher percentage for seeking gas supplies.
The same formula is likely to be continued in the next auction. In the first round of auction in November 2019, Essar Steel, Adani Group and state-owned GAIL bought a majority of volumes on offer at a price of USD 5.1-5.16 per unit.
Essar Steel had picked up 2.25 mmscmd in the country’s first transparent and dynamic forward auction that lasted about five-and-half-hours on November 15, 2019, sources said.
Gujarat State Petroleum Corp (GSPC) picked up 1.2 mmscmd while Adani Group and Mahanagar Gas Ltd bought 0.3 mmscmd, sources said, adding GAIL, acting on behalf of fertiliser companies, bought 0.3 mmscmd of gas.