RIL Wants Higher Price for KG Basin Gas

Reliance Industries Ltd (RIL) has demanded a higher price for its Krishna Godavari-(KG)-D6 gas price from April 1, 2014 after the current below-market rate of $4.205 per million British thermal unit (mmBtu) expires.

Business Standard has reported that RIL, on June 15, wrote to the oil ministry, proposing to price natural gas it produces from the KG basin block in Bay of Bengal at a rate equivalent to price India pays for importing liquefied natural gas (LNG).

From April 1, 2014, RIL wants the gas to be price at import parity as is done in case of crude oil.The government had in 2007 fixed a price of $4.2 per mmBtu for gas from the KG-D6 block for first five years of production. KG-D6 fields began production on April 1, 2009 and the current price expires on March 31, 2014.

RIL wants to price KG-D6 gas at 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus $0.26 per mmBtu. At $100 per barrel oil price, gas will cost $12.93 per mmBtu.

This formula is different from the one that was approved in 2007.