RIL pays 6% more to buy own gas

Reliance Industries is paying 6 per cent more price to buy coal-bed methane gas from its own block in Madhya Pradesh in the second quarter of current fiscal, the company said in an investor presentation.

RIL had in May become the first buyer of gas it produced from its own coalbed methane (CBM) block after agreeing to pay the highest price for the fuel. It paid $ 4.23 per million British thermal unit for the CBM produced during May-June. "For 2Q (JulySeptember) FY18 supplies discovered price is USD 4.50 per mmBtu," the company said in an investor presentation after announcing first quarter earnings. "RIL is the successful bidder."

RIL said it began CBM production from its Sohagpur blocks in Madhya Pradesh in March this year. "205 wells are flowing and production ramp up is in progress. Produced 8.6 million standard cubic meters of gas in 1Q FY18," it said.

Following the April decision of the government to give coal bed methane (CBM) producers freedom to discover market price, RIL invited bids from users of gas.

The price discovered in the process was USD 4.23 for May-June and USD 4.5 for July-September. The rate is almost double the USD 2.48 per mmBtu price RIL gets for natural gas produced from its eastern offshore KG-D6 block. RIL said average production of gas from KG-D6 was 6.4 million standard cubic meters per per day and oil and condensate at 2,791 barrels per day during April-June quarter. This compares to 7.4 mmscmd of average gas production and 3,749 bdp of oil and condensate production during January- March. "Production continues to decline due to natural decline in the fields," it said. "Currently eight wells in D1-D3 and three wells in MA field (in KG-D6 block) are under production." RIL has invested about USD 500 million in CBM and laying a 300-km pipeline from Sohagpur to Phulpur in Uttar Pradesh to connect to the national gas grid.

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.