RIL need not club gas margin: Deora | business | Hindustan Times
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RIL need not club gas margin: Deora

Oil Minister Murli Deora on Tuesday said Reliance Industries need not club its marketing margin with the gas sale price for purpose of calculating royalty — a statement that overturns a suggestion by oil regulator DGH.

business Updated: Feb 23, 2010 21:32 IST

Oil Minister Murli Deora on Tuesday said Reliance Industries need not club its marketing margin with the gas sale price for purpose of calculating royalty — a statement that overturns a suggestion by oil regulator DGH.

DGH had wanted the $ 0.135 (Rs 6.2) per million British thermal unit margin, which RIL charges towards marketing cost and risks, to be added to the sale price of $ 4.20 (Rs 193) per mmBtu for calculating royalty and profit share to the government. “The Production Sharing Contract (under which firms like RIL produces oil and gas from areas given by the government) does not envisage sharing of revenue earned by the contractor (RIL) on the marketing margin between the government and the Contractor,” Deora told Rajya Sabha.

Under the PSC, the government has approved a price formula for sale of gas from KG basin D6 field at the delivery point (the place where RIL transfers custody for sale to the customer). $4.20 per mmBtu is the price fixed for five years.

“The marketing margin is beyond the delivery point and arises as a result of Gas Sale and Purchase Agreement signed between the seller and the buyer,” Deora said in a written reply.

“The PSC provides for sharing of revenue between the government and the contractor (RIL) of the sale of gas at the said price at the delivery point,” he said, adding the marketing margin was settled between the buyer and the seller.