GAIL blocks Ravva satellite price rise

Vol 16, PW 26 (25 Jul 13) News in Brief

Gas marketer GAIL has saved itself a considerable amount of money by blocking a proposed gas price increase at Cairn India's Ravva satellite fields offshore Andhra Pradesh.

Cairn will soon begin sending invoices to GAIL for 1.1m cm/d of gas sold from Ravva and its satellite fields since April 1, 2012. Cairn will go ahead with its original plan to raise the gas price at the main Ravva field from $3.50/mmbtu to the D6-linked rate of $4.20/mmbtu.

However, in a victory for GAIL, Cairn will not increase the gas price at the Ravva satellite fields, which stands at $4.30/mmbtu. Cairn was earlier proposing a Ravva satellite gas price of $4.50/mmbtu but GAIL stubbornly refused until Cairn backed down on February 25 this year.

At GAIL's insistence, Cairn also agreed to only backdate the price increase at the main Ravva field to April 1, 2012 instead of July 1, 2010 as proposed. Ravva's satellite fields are producing 840,000 cm/d of gas.