Price rise for Ravva satellite gas was due in September

Vol 10, PW 17 (14 Dec 06) Midstream & Downstream

Should it wish the Ravva consortium is within its rights to backdate the imminent price rise for Ravva satellite gas from September this year.

According to the ministry, thats when the price of gas from the Ravva satellite fields was due for a rise. The ceiling price was valid for a period of five years from the date of first supply, that is, till September 2006, says the ministry note.

Revision of the ceiling price for Ravva satellite gas became due from this date. Ravva satellite gas is today sold at a ceiling price of $3.30 per mmbtu.

But adds the ministry: Although the GSA is valid till 2019, it shall also end on completion of the total contracted supply of 1.971bn cubic metres. However, if it is commercially viable for the seller to continue the supply of gas, the duration shall be extended by mutual agreement.

Under the Ravva satellite GSA, a total quantity of 1.953bn cubic metres of gas has already been supplied till 22nd November. Given this background, continues the ministry, it was considered necessary that GAIL enter into negotiations with the Ravva joint venture consortium to arrive at a price through mutual agreement.

Giving an update on negotiations, the ministry says GAIL and the Ravva consortium have agreed a price around $4.40 per mmbtu and that negotiations are still continuing. Signed on 28th October 1994, adds the ministry, the Ravva PSC, provided that the contractor is free to sell gas from Ravva satellite to any party in India.

However, the PSC further provided that the government shall be entitled to require the contractor to sell such natural gas to the government, provided that the government agreed to match the price obtained by the contractor. As directed by the government, GAIL matched the price offered by a private party and signed the GSA on 9th April 2001 with the Ravva joint venture consortium.

Gas supplies began in September 2001.