Gail India has lodged a protest with the petroleum ministry on British Gas India's decision to sell natural gas from the Mukta Panna Tapti fields.
The public sector gas company, to which BG is supposed to sell the gas produced, has said that power generation along its Hazira-Vijaipur-Jagdishpur pipeline would be reduced by over 2,000 mw and fertiliser production down by over 5.5 million tonne per annum if the joint operators of the fields start selling gas on their own.
The fields off Mumbai are operated by BG along with Oil and Natural Gas Corporation, which has a 40 per cent share. BG and Reliance have 30 per cent equity each in the special purpose vehicle floated for the fields.
Gail has been selling 11 million standard cubic meter per day gas from these fields.
The joint venture had in June sought a $2.49 increase in the ceiling price of $3.11 per million British thermal units being paid by Gail, which rejected the request on the grounds of market affordability.
Reliance has also reportedly threatened to sell its 30 per cent gas share to National Thermal Power Corporation for its power plants. Gail officials said diversion of gas away from the HVJ system would result in a loss its customers.
At present, about 37 mmscmd gas is received at Hazira, out of which 11 mmscmd gas is sourced from the Mukta Panna Tapti joint venture and the rest comes from ONGC's own fields.
Natural gas is allotted to consumers by the gas-linkage committee since its availability in the country is less than the actual supply. Fertiliser and power consumers, with allocation of 17.5 and 14.30 mmscmd, account for major consumption.
The price of gas produced by the joint venture is currently market determined. Gail procures gas within the price ceiling specified under the production-sharing contracts. BG had sought a revision of this ceiling. The multinational wants to sell its share of 190 mmscmd gas to Gujarat State Petronet Corporation at a $4 per mBtu.
It is felt that there is a case for revising the retail price of natural gas since the international price ranged around $6.
The producer price of gas from joint venture, private companies and imported regasified-LNG from the Dahej terminal is being sold in the range of $2.7 to $3.6, while the gas produced by ONGC and OIL is sold cheaper at 75 per cent import parity.
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