Reliance Industries Ltd has raised by 25 per cent the marketing margin on the natural gas it will sell from its eastern offshore KG-D6 field.
RIL, which is to begin gas production from the Krishna Godavari basin KG-D6 fields this week, has raised the marketing margin to $0.15 per million British thermal unit from $ 0.12 per mmBtu earlier, a source said. The rate, which would be charged over the $4.20 per million British thermal unit base gas price, is however lower than the $0.18 per mmBtu margin charged by state-run GAIL.
The increase, he said, was due to the additional risk of 'ship-or-pay,' an obligation under which the company would be obliged to transport the committed volumes or pay for the gas.
A company spokesperson did not offer any comments.
RIL has communicated the new marketing margin in the revised gas sales and purchase agreement to the 12 identified fertiliser companies that will consume the KG-D6 gas. The fertiliser companies have opposed the revision but the two sides have considerably narrowed their differences and are likely to sign the GSPA by weekend.
The delivered price, including taxes and transportation charges, of Reliance gas in Andhra Pradesh would be $5.34 per mmBtu while in Maharashtra it would cost $5.87. In Gujarat, it would cost $5.87 and along the HVJ pipeline $6.21.
Billionaire Mukesh Ambani-owned Reliance Gas Transportation India will charge $0.93 per mmBtu for transporting Reliance gas through its Kakinada to Bharuch East-West pipeline. The charge would be $0.17 per mmBtu for consumers in Andhra Pradesh.
State-run gas monopoly GAIL India would charge between $0.14 and $0.60 per mmBtu for providing the last mile connectivity to consumers through its pipeline network.
Gas from the deep-sea KG-D6 block would first be transported through an under-sea pipeline to Gadimoga near Kakinada in Andhra Pradesh, where it will be processed before being transported through the East-West pipeline network.
RGTIL has already completed the 1,386 km East-West pipeline, which has also been connected to pipeline networks of GAIL and GSPL at least three points for transporting the gas to end users.
The source said Reliance was likely to begin gas output from KG-D6 by the weekend and the first sales were likely in the second half of April.
Initial volumes may vary between 5 and 15 million standard cubic meters per day and would rise to 25 mmscmd within a month. It would rise to 40 mmscmd by July.
Fertiliser companies have been given the first charge over Reliance gas, followed by power plants, LPG extraction plants and CNG retailers.
