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Rediff.com  » Business » Cairn JV seeks $6.75 per mmBtu Ravva gas

Cairn JV seeks $6.75 per mmBtu Ravva gas

Source: PTI
August 17, 2009 18:13 IST
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A man counts his money at a petrol pumpEven as the debate rages on the $4.20 per mmBtu price approved for Reliance Industries' KG basin fields, a Cairn India-led joint venture has discovered a market price of $6.75 per mmBtu for the fuel from a field in the same basin.

Partners Cairn, Oil and Natural Gas Corporation and Videocon have written to the government seeking an increase in the Ravva Satellite field gas price to $6.75 per million British thermal unit, official sources said.

State-run gas utility GAIL India Ltd buys 0.9 million standard cubic meters per day of output from Ravva Satellite fields at $4.30 per mmBtu.

The new price sought by the Ravva consortium is 60 per cent more than the maximum price of $4.20 per mmBtu approved for RIL's KG-D6 fields for five years to March 2014.

Sources said GAIL, which markets the gas produced from Ravva and Ravva Satellite gas fields, had in October last year offered a price of $5.73 per mmBtu for the fuel but the price was not acceptable to the joint venture partners.

Ravva joint venture in April this year invited offers from Vemagiri Power Generation Ltd of GRM Group, GVK Power and Infrastructure Ltd and Silkroad Sugar Pvt Ltd.

Silkroad offered a price of $6.75 per mmBtu and accordingly Ravva joint venture has asked GAIL to match the price, they said.

The $-4.2 per million British thermal unit price fixed for gas produced from KG-D6 fields of RIL was lower than the average of $5.51 per mmBtu charged by UK's BG-led consortium for Panna/Mukta and Tapti gas.

It was also lower than the $4.75 per mmBtu for the UK firm's Lakshmi fields.

Sources said petroleum ministry has asked GAIL if it is willing to buy gas at the new price and in case the state-run firm refuses, the Ravva joint venture would have the freedom to market the gas produced from satellite field to private parties at a price not less than $6.75 per mmBtu.

In case it is decided that the joint venture may market the gas produced from satellite field to private parties, they shall not charge any marketing margin.

The Production Sharing Contract for Ravva stipulates that the price of natural gas produced from the gas field other than existing discoveries for use in India shall be price at market determined rates.

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