Vedanta Ltd is seeking a premium of at least $1 over the government-mandated price for the natural gas it plans to produce from its Assam block. The firm, which merged the Rajasthan oil-discoverer Cairn India Ltd into itself, has sought bids from users for the gas it plans to produce from the Hazarigaon field in Assam from March next year.
The company plans to produce 0.10 million standard cubic meters per day from the onshore block it had won under the discovered field bid round a couple of years back.
Bidders have been asked to quote a number above the APM or government mandated gas price plus $1 per million British thermal unit, the company said in the bid document.
Pricing formula in USD per mmBtu will be “APM + 1.0 + P”.
“Bidders shall be required to quote the variable denoted as ‘P’,” it said. ” ‘P’ shall be quoted as a non-negative value, equal to or greater than Zero (0).”
The government fixes the price of gas produced by state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) from fields given to them on nomination basis, every six months. This price is called APM or administered price mechanism rate.
The gas price for six months beginning April 1 is $1.79 per million British thermal unit.
The duration of the contract will be 8 years from March 1, 2022, the bid document said.
E-bidding for the gas is scheduled to take place on September 30.
The government has given freedom to producers to discover a market rate for the gas they produce. Gas producers have used different formulae to discover the price – some used an oil price benchmark, some a gas linked index and Vedanta is seeking a price that is over and above the government-mandated rate for state-owned firms.
