RIL-BP to kick off India’s first gas e-auction next month
India’s natural gas market will witness its first e-auction next month when Mukesh Ambani-led Reliance Industries and its partner UK energy major BP, kicks off bidding for gas from their $5-billion offshore project in the east coast. This will be the first time that gas produced from a domestic field will be e-auctioned, a practice the Narendra Modi government had introduced for giving out telecom spectrum and coal blocks after the Supreme Court struck down the allocation methods followed earlier.
“We expect the independent agency appointed for conducting the auction will be able to conduct the auction on October 10 once the pre-requisites are completed,” a senior BP executive told TOI. CRISIL Risk and Infrastructure Solutions (CRIS) will conduct the auction online on a web-based platform and the kick-off price will be benchmarked to 9% slope of Brent. RIL-BP is holding the sale under the policy provision of giving producers marketing and pricing freedom for gas from geographically difficult fields. For other fields, the government earmarks the quantity of gas to various industries and the price is set according to a 2014 formula, which the industry says is often non-remunerative.
Industry players said the auction by RIL-BP could prove to be a touchstone for the Centre’s proposed gas exchange and indicate whether the domestic gas market is ready for large-scale competitive pricing. The government is working to raise the share of natural gas in the country’s energy basket from 6% to 15%. RIL-BP is initially offering 5 mcmd (million cubic metres per day) of gas expected to flow from mid-2020 from R-Series fields in the KG-D6 block off the Andhra coast. This is part of three sets of discoveries in the block — R-Cluster, Satellites and MJ — being developed for a peak of 30 mcmd.
(Source: TIMES OF INDIA 15-09-19)