The gas will be auctioned on February 21 and bidders can seek a minimum volume of 50,000 standard cubic meters per day (scmd).
The sales price of the gas would be determined by combining the monthly value of Asian spot LNG benchmark JKM with a variable that bidders would quote in the auction. The value of the variable would start from a negative $0.20 per mmbtu. At the current JKM value of $9.4 per mmbtu, the starting bids would be $9.2.
The gas price will be subject to a floor determined by adding $0.40 to the government-set price ceiling for domestic gas from difficult fields. With the current price ceiling at $9.96 per mmbtu, the floor would be $10.36 per mmbtu. The price ceiling is revised every year in April and October.
Bidders are required to provide bank guarantees. Vedanta aims to conclude gas sales agreements with buyers by March 1.
The gas will be delivered at the Raageshwari terminal of the Barmer block. The gas field is connected to the Mehsana – Bhatinda pipeline.Increased availability of domestic gas is expected to spur consumption. Falling international prices have already boosted imports and domestic consumption. Domestic gas is usually cheaper than imports.Indian gas marketers have recently stitched multiple LNG import deals to meet future gas demand in the country. In January, GAIL tied up with Vitol for the purchase of 1 million tonnes per year of LNG, and with UAE’s Adnoc Gas for half a million tonnes per year of LNG.
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