ONGC to dispense KG gas from June 15, seeks $12 price

India’s top oil and gas producer ONGC has finally put a date for the much-awaited start of production from its KG basin gas field as it sought $12 price for the fuel it plans to deliver from June 15. Oil and Natural Gas Corporation (ONGC) will produce 0.4 million standard cubic metres per day – a fraction of the planned output from the block that sits next to Reliance Industries’ prolific KG-D6 area in the Bay of Bengal, from June 15 and will ramp it up to 1.4 mmscmd by February 5, 2024, according to tender document the firm floated, seeking bids for gas sales. ONGC’s director for production Pankaj Kumar had in March said the firm will start production of oil from KG-DWN-98/2 or KG-D5 block in the Krishna Godavari basin by May or June this year. A small amount of gas will also flow with the oil that comes out of the reservoir lying several hundred metres below the seabed. The company has now sought bids from users like The ceiling price for difficult-to-produce fields like deepsea for six months starting April 1 is $12.12 per mmBtu city gas operators that sell CNG to automobiles and piped cooking gas to households, companies using gas to produce fertiliser or make electricity, LPG producers and traders, for the gas that will flow from June 15. ONGC asked companies to quote a premium ‘P’ that they are willing to pay over and above the rate arrived at by calculating 14 per cent prevailing Brent oil price plus $1 per million British thermal unit (mmBtu), the document showed. At the current Brent crude oil price of nearly $77 per barrel, the base price comes to $11.8 per mmBtu ($10.78 per mmBtu at 14 per cent of Brent oil price plus a markup of $1). The floor price will be the lower of the price arrived at using this formula or the rate that the oil ministry’s arm PPAC notifies twice a year for deepsea fields. The ceiling price for difficult-to-produce fields like deepsea for six months starting April 1 is $12.12 per mmBtu. ONGC was originally to start gas product