ONGC Sells Gas On Exchange After Failed Public Auction
ONGC auctions gas to India's top consumers of the fuel on the Indian Gas Exchange.
Oil and Natural Gas Corp. Ltd. auctioned gas to some of India's top consumers of the fuel on the Indian Gas Exchange after its public auction last week failed because of absurdly high bids, according to two people aware of the details.
For gas sold through IGX, the state-run oil and gas explorer received bids from top 50 companies seeking the fuel for city gas distribution, and commercial and industrial purposes, according to the people, who spoke on the condition of anonymity as they are not authorised to divulge details.
The top bidders included Gail India Ltd., Indian Oil Corp., Bharat Petroleum Corp., Mahanagar Gas Ltd, Indraprastha Gas Ltd., Gujarat State Petroleum Corp., and Adani Total Gas Ltd., among others.
The auctioned volume of 0.70 million metric standard cubic metres per day will translate to 26,000 metric million British thermal units of gas per day. This would mean each bidder would be allocated around 520 mmBtu of gas, the people quoted earlier said.
ONGC had set a ceiling price of $15 per mmBtu. It will be allocated after the government announces new ceiling price on Sept. 30.
The ceiling price may be fixed by PPAC by end of the week and actual allocation may happen at around $12.5 per unit, the people said.
ONGC has bid out for one month supply contract on expectations that government may roll back ceiling price for high pressure, high temperature gas, one of the two people said. That would allow ONGC to sell the gas at market prices.
In August 2021, central government allowed the sale of natural gas through the exchanges as an additional mechanism apart from the e-auction route already available to producers.
In a year, the government has allowed a sale of up to 500 mmscm or 10% of annual production from contract area, whichever is higher, through gas exchanges.
Only a small part of India’s total gas output of 28 billion cubic meters is freely sold in the market under marketing and pricing freedom. But with output from RIL-BP fields in the KG Basin expected to grow to 30 mmscmd by 2023 and ONGC and Cairn India also increasing production from such fields, volumes traded on exchanges are set to rise manifold, the people said.