GSPC opposes Niko attempt to hike Hazira gas price

Vol 8, PW 22 (09 Feb 05) Midstream & Downstream

Gujarat Petroleum and Niko Resources are in disagreement over the need to raise the price of gas produced from the Hazira gasfield.

Hazira gas sales contracts expired on 31st October last year and Niko wants to raise gas prices in the new contracts but GSPC opposes this. We will maintain existing prices till 31st March this year, says a GSPC source.

Negotiations for the new contracts will start later this month or early next month. GSPC is unsure if there will be a price increase.

Everything depends on what the government says, adds a source. GSPCs differences with Niko burst into the open on 5th October at a customer meeting called by the consortium in Ahmedabad.

About a dozen Hazira gas customers attended the meeting in the GSPC boardroom, among them Gujarat State Fertiliser Corporation, Gujarat Narmada Fertilisers, Gujarat Gas, Gujarat Alkalies, Torrent, Adani and Essar. Niko executives made a presentation in favour of a price increase, raising a chorus of protest from assembled customers.

What is the justification for any price rise asked one customer. Another customer wanted to know what had changed beyond the crude oil price.

Niko and GSPC said their cost of operations had gone up. Customers refused to accept this argument and reminded GSPC and Niko that regassified LNG from Dahej is available at least 12 cents cheaper than Hazira gas.

They also stressed that Dahej LNG prices will remain stable until 31st December 2008. We understand the meeting concluded with GSPC officials saying they would not like to raise prices and assuring customers they would persuade Niko to accept this position as well.

We could clearly see there were differences between GSPC and Niko over the price rise, reveals a source present at the meeting.