Reliance Industries will sell the natural gas it produces from coal seams in Madhya Pradesh to its own units in Gujarat and Maharashtra at $4.23 per million British thermal units.
After last month's Government decision to give coal bed methane (CBM) producers freedom to discover market price, RIl invited bids from users of gas.
Five companies including RIl participated in the bidding process, according to the bid evaluation report the company posted on its website.
The bidders besides RIl were Deepak Fertilizer & Petrochemicals Corp ltd, state-owned gas utility GAIl India ltd and GMR's Rajahmundry and Vemagiri power plants.
While RIl bid $4.23 per mmBtu price for using the gas at its petrochemical plants at Patalganga and Nagothane in Maharashtra and Jamnagar in Gujarat, Deepak Fertilizer was a close second bidding $4.159. GAIl put in a bid of $4.009 while GMR quoted $2.48 per mmBtu for both the plants.
The price discovered is almost the same as $4.205 per mmBtu price fixed for RIl's eastern offshore KG-D6 gas field for first five years of production beginning April 2009.
A sixth bid from Asahi India Glass ltd was rejected as it quoted for 0.51 million standard cubic meters per day (mmscmd) which "exceeds the available CBM gas volume for sale of 0.40 mmscd," the evaluation report of its CBM gas bids said.
The bid document stipulates that "the volume quoted by the bidder shall not be lesser than 0.05 mmscmd or shall not exceed 0.40 mmscmd (approximate volume expected to be available for sale)," the report said, adding that in view of this the bid by Asahi was not considered.
The six bids put in a total requirement of 2.16 mmscmd as against the available volume of 0.40 mmscmd.
Through the April 13 notification, the oil ministry had stated that a CBM producer has to call for open bids for sale of coal gas and seek price quotes to discover the market price.
The process prescribed was the same as the one RIl had run in 2012 to discover a price for CBM gas it is to produce in Madhya Pradesh.
Back in 2012, it had sought bids for 3.5 mmscmd (as against 0.40 mmscmd put on offer this time) of coal gas from its Sohagpur CBM block in Madhya Pradesh at a benchmarked rate at 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus USD 0.26 per million British thermal unit.
The formula was the same at which Petronet lNG, a joint venture of public sector oil companies, whose chairman is the oil secretary, used to buy long-term liquefied natural gas (lNG) from Qatar.
At $100 per barrel oil price prevalent that year, CBM from RIl's Madhya Pradesh block was to cost $12.93 per mmBtu. At USD 55 a barrel rate currently, it would cost $7.2.