Oil ministry rejects GSPC demand for USD 8.5/unit gas price

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SME Times News Bureau | 18 Dec, 2014
The union petroleum ministry has declined the Gujarat State Petroleum Corp.'s (GSPC) demand for a gas price of USD 8.5 per unit for its eastern offshore Deen Dayal West (DDW) fields, saying the approved rate of USD 5.05 will apply to the company.

"In this regard...this ministry had decided Nov 14 that the matter of pricing of DDW gas would be as per the New Domestic Natural Gas Pricing Guidelines, 2014, notified Oct 25, 2014," Petroleum Minister Dharmandra Pradhan Wednesday said in a written reply to the Rajya Sabha.

The price applicable under the guideline will be USD 5.05 per unit on gross-calorific value (GCV) basis, he said.

GSPC had, in October, requested a market-determined price for gas from its DDW fields in the Krishna-Godavari (KG) basin, saying that it would otherwise be forced to sell gas at a price below the production cost.

The company had asked the ministry to "nominate Gujarat Narmada Valley Fertilizer & Chemicals Ltd. (GNFC) for supply of DDW field gas at price and delivery terms actually negotiated between GSPC and GNFC based on arm's length principles," Pradhan added.

The ministry had earlier been informed that GNFC had agreed to purchase gas produced from DDW the fields at $8.5 per unit.

"GSPC has not intimated about the start of commercial production of gas from its discoveries in the Block KG-OSN-2001/3 in KG Basin," Pradhan said.

GSPC had won the Block KG-OSN-2001/3 in the third round of auction under New Exploration Licensing Policy (NELP) launched in 2003.