Ravvagas to cost $4.2/mBtu
1-Jan-1970


The joint venture between Cairn India, ONGC, Videocon Industries and Ravva oil will get a new price of $4.2/mBtu for gas produced from its East Coast Ravva Fields.

This is lower than the $4.75/mBtu that the joint venture was seeking.

Mr B.C. Tripathi, Chairman and Managing Director, GAIL (India) Ltd, told Business Line that $4.2/ mBtu has been approved by the Petroleum Ministry and will be notified shortly. "This price is excluding the marketing margin, transmission charges, and other levies to be charged by GAIL that transports and markets this gas."

Till the new price of $4.2/mBtu is notified, Mr Tripathi said, the current price will prevail. GAIL buys 0.83 mscmd of gas from Ravva Field and 0.83 mscmd from Ravva Satellite Field. . Currently, the gas from the Ravva field is sold at $3.5/mBtu and the price of gas from Ravva Siltellite IS

This price is excluding the marketing margin, transmission charges, and other levies to be charged by GAIL that transports and markets this gas."

$4.3/mBtu excluding the marketing margin, transmission charges and other levies to be charged by GAIL.

CONTRACT PRICE

Gas rates from Ravva / Ravva Satellite Fields expired on November 30, 2008, and new prices were applicable from the next day - December 1 - according to the production sharing contract the contract provides for price revision after five years of gas supply.

Mr Tripathi said, "The Petroleum Ministry had asked GAIL to keep Reliance Industries' D6 block gas price of $4.2/mBtu (at the landfall point) as one of the benchmarks while negotiating the revised price for RavvajRavva Satellite Field."

The Ravva joint venture gets the market price for gas from Ravva Satellite ($4.3/mBtu), which is also being reviewed. Though the price from the Ravva Satellite Field was already market determined, it was lower than the price at which the PannaTapti joint venture sells its gas.

Gas price from PMT fields averages at $5.7 /mBtu, a benchmark which any seller would look at Besides, the production sharing contract and the gas sale contract provide that price formula be benchmarked with the imported price of fuel oil for an average of 12 months, which is equivalent to $U.s/mBtu gas price.


Source: Business Line, Delhi, 4th August 2010
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