RIL prices Gujarat gas at $6.5/unit | business | Hindustan Times
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RIL prices Gujarat gas at $6.5/unit

business Updated: Jan 24, 2012 22:28 IST
Anupama Airy
Anupama Airy
Hindustan Times
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In an indication that it will no longer settle for the government-approved price of $4.2 per unit, Mukesh Ambani-led Reliance Industries Ltd (RIL) has for the first time indicated a price of $6.5 per unit for producing natural gas from its shallow-water offshore block (GS-01) in the Gujarat-Saurashtra basin. UK energy major BP is a 30% partner with RIL in the block.

“The price of $4.2 per unit and oil price of $60 a barrel cannot be taken as the basis for pricing and could not be set as a benchmark price since actual prices are expected to be significantly higher,” RIL said in a December 28 letter to the petroleum ministry while declaring the gas discovery from its GS-01 block as commercial.

“The prices considered by the contractor (Reliance) for declaration of commerciality are $6.5 per unit (for gas) and $70/bbl of condensate (oil),” the letter said. RIL has informed the government that the life of the field is nine years with in place gas reserves of 58 billion cubic feet and 1.5 million barrels.

Given that oil and gas reserves of the block are comparatively much less than what RIL is currently producing from its KG basin block, experts said the expectation of a price of $6.5 per unit indicates that RIL wants the government to follow global pricing practices for marketing domestic gas.

RIL spokesperson offered no comments on being contacted by HT. However, sources close to RIL said the cost of gas from fields with less reserves is always more than those with high reserves.

As already reported by HT, RIL has charged the government of unfair discriminationby fixing this “sub-market (or below market) price” for gas being produced by the company from its KG-D6 block.