Sensible gas pricing can unlock 6.75-tcf

Vol 19, PW 14 (24 Mar 16) News in Brief

If you believe the government it's decision to let explorers price deepwater gas against imported fuel could unlock an impressive 6.75-tcf in 28 undeveloped discoveries worth an estimated $28.35bn.

That's the ambitious conclusion of a March 10 government statement telling operators they can price gas from deepwater, ultra-deepwater and high pressure/temperature discoveries made before January 1, 2016 (where commercial production has not begun) against the landed $USD/mmbtu price of a) fuel oil b) a combination of naphtha, coal and fuel oil or c) LNG, whichever is lower. But there's a catch, anyone embroiled in litigation beware.

The statement adds: "In case of discoveries yet to begin commercial production by January 1, 2016 if there is pending arbitration/litigation directly pertaining to gas pricing covering such fields this policy guideline shall be made applicable only on conclusion/withdrawal of such litigation/arbitration and the attendant legal proceedings."