Reliance Industries Ltd is seeking a minimum rate of $10 for the gas it intends to produce from coal seams, adjusting its pricing strategy to align with the evolving energy landscape. The company has invited bids from potential users for 0.90 million standard cubic meters per day of gas from the coal-bed methane (CBM) block SP (West) CBM-2001/1 located in Madhya Pradesh. Bidders are required to specify a premium they are willing to pay above 12.67% of the Dated Brent crude oil price.
The gas price will be determined as the higher of two options: either 12.67% of Dated Brent plus premium ‘V,’ or the government-declared monthly price for conventional gas. The government-set price for January stands at $7.82 per mmBtu. Reliance has set the initial bid price for ‘V’ at $0.50 per million British thermal units, and bidders must propose a value higher than this.
Given the current Brent crude oil price of $78 per barrel, the minimum gas price would be $10 per mmBtu. This calculation is based on 12.67% of $78, resulting in $9.88 per mmBtu. Adding the minimum premium of $0.50 brings the total gas price to approximately $10.4 per mmBtu. As reported by Business Standard, the e-auction is scheduled for January 31, and the contract duration spans one to two years starting from April 1.
