ONGC flares Rs1.7 lakh/day at Gamij

Vol 16, PW 26 (25 Jul 13) Midstream & Downstream

Absurd it may sound but ONGC is being forced to flare 15,000 cm/d gas - equivalent to $3000/day (Rs1.7 lakh) in lost revenue - from its Gamij oil and gasfield in Gujarat until the new gas pricing regime comes into force on April 1st next year.

Ten weeks ago on May 7 ONGC published a tender offering 15,000 cm/d from its 70-sq km Gamij field in Gujarat for five years at $5/mmbtu on a 'fall back' basis or when available. But in a surprise move on June 27 the oil ministry directed ONGC to abort the process, leaving 12 sorely disappointed potential customers in Gujarat who responded to the bid deadline on July 12.

By coincidence June 27 was also the day the Indian cabinet endorsed a complex gas pricing formula proposed by former central bank governor C. Rangarajan to link the price of domestically produced gas (currently $4.2/mmbtu) to an average of the prevailing ‘netback’ price in LNG exporting countries (Qatar, Malaysia, Nigeria etc) with international benchmarks such as Henry Hub in the US, the JCC in Japan and the NBP in Britain.

Most disappointed will be GSPC Gas, the only bidder with a pipeline network ready to take Gamij gas. "ONGC has told us to wait,” confirms GSPC Gas, “but we don't know for how long.

" Another disappointed bidder is Adani Gas which wanted to evacuate Gamij gas in truck-mounted cascades for its CNG business. “We planned to take a plot of land at Haldarwas and install a gas compressor,” adds Adani.