Reliance Industries Ltd and its partner bp plc of UK have reverted to oil indexation for pricing the gas they produce from India’s largest private-sector operated field in KG basin as they look to tap into the upside from the buoyant oil market.
Reliance and bp in a tender have sought bids from buyers for 4 million standard cubic meters per day of gas from KG-D6 block in Bay of Bengal starting December 1, 2023.
They want users to quote a price indexed to Brent crude oil price, according to the tender document. The firm had in recent previous auctions, the last being in May this year, sold gas indexed to international gas benchmark, JKM.
“The consortium issued a notice inviting offer dated October 27, 2023 and invited offers from interested companies to offtake gas from the gas fields on the price basis specified in Request for Proposal (RFP), commencing from December 1, 2023 at the delivery point located in Gadimoga, Andhra Pradesh,” the tender document said.
It asked bidders to quote a premium ‘v’ they are willing to pay over and above 12.67 per cent of dated Brent crude oil price. The starting bid price for ‘v’ has been kept at USD 1.08 per million British thermal unit.
At current Brent crude oil price, the starting price translates into a gas price of USD 11.8 per mmBtu (12.67 per cent of USD 85 plus USD 1.08). The maximum bid value against ‘v’ shall be USD 4.5 per mmBtu, the tender said.
