New Delhi: Billionaire Anil Agarwal's Vedanta Ltd is seeking a minimum of $ 9.5 for the natural gas it produces from its Rajasthan block, according to a tender floated by the firm for the sale of the fuel.
Vedanta sought bids from users for 0.6 million standard cubic meters per day of gas it plans to produce from the RJ-ON-90/1 block in the Barmer basin of Rajasthan in three months beginning October 1.
Gas extracted from below ground is used to produce electricity, make fertilizer, turned into CNG to fire automobiles, or piped to household kitchens for cooking purposes.
In the tender, Vedanta asked users to quote a variable 'P' that they are willing to pay over and above 14.5 percent of Brent crude oil price.
At the current Brent price of $ 84 per barrel, the base comes at $ 12.18 (14.5 percent of $84). Users have to quote a 'P' over and above this price.
Gas price will be calculated as lower of Platts LNG WIM (the price of liquefied natural gas delivered on India's west coast) and 14.50 per cent of Brent Price + P, it said.
"Notwithstanding the value calculated (through the formula), the Sales gas price for any month shall not be lower than $ 9.5 per million British thermal unit," the tender said.
The price being sought by Vedanta is almost 50 percent premium over the ceiling price of $ 6.5 per mmBtu paid to state-owned producers like ONGC for output from legacy or old fields.
E-bidding is planned for September 8.
Block RJ-ON-90/1 Block, where a subsidiary of Vedanta holds 70 percent stake, is predominantly an oil production block but it also has some gas resources. State-owned Oil and Natural Gas Corporation (ONGC) holds the remaining 30 percent interest in the block.
Vedanta in the tender document said it has developed the Raageshwari gas terminal to process and deliver natural gas produced from the RJ block at Barmer. RGT is connected by the Barmer-Pali pipeline (Mehsana-Bhatinda Pipeline) of GSPL India Gasnet Limited.
"In line with the 'Natural Gas Marketing Reforms' notification published by the Ministry of Petroleum and Natural Gas (MoPNG) on October 15, 2020, and detailed guidelines issued on December 3, 2020, as 'Discovery of Market Price for Domestically Produced Natural Gas through e-Bidding' notification, Vedanta has issued a request for proposal (RFP) and invited offers from interested companies to offtake all or a portion of gas available for sale from the gas field," the document said.
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