Gas from C-Series to flow from December 1

Vol 13, PW 12 (19 Nov 09) Midstream & Downstream

Good news for Gujarat gas customers! Eleven days from now ONGC says it will begin first supplies from the C-Series fields offshore Mumbai – delayed since August because of a damaging pricing dispute with the oil ministry.

“Gas supplies from C-Series will begin on December 1,â€‌ ONGC chairman RS Sharma tells PETROWATCH. “All the pricing aspects will be sorted out later.

But we have been directed to begin supplies.â€‌ Three major GAIL customers in south Gujarat will benefit most from first supplies of 850,000 cm/d from the C-39 and C-22 fields: United Phosphorous, Arvind Mills and Gujarat Flourochemicals.

Around 50,000 cm/d has also been set aside for small to medium sized chemical and glass manufacturers in south Gujarat. GAIL is likewise believed to be talking to Torrent Power about supplying C-Series gas to its newly commissioned 1150-MW power station near Surat.

Still unclear is how much ONGC will charge GAIL or how much GAIL, as the middleman, can charge its customers. “We have received orders to start the supply of (C-Series) gas,â€‌ confirms a GAIL source.

“But we have not received any instructions on how much we can charge customers.â€‌ Talking to PETROWATCH, ONGC chairman RS Sharma blamed the ongoing Ambani feud in the Supreme Court for the government’s delay in confirming a price for C-Series gas.

“Gas pricing has become a very sensitive issue,â€‌ adds Sharma. “For now we will have to watch and wait.

â€‌ In February this year ONGC signed a contract with GAIL promising the entire 3m cm/d of C-Series production at the market rate of $5.5/mmbtu. But days before first supplies were to begin on August 10 the oil ministry stepped in to challenge ONGC’s decision to charge GAIL $5.5/mmbtu and blocked the deal.

The ministry now appears ready to agree a price of $4.75/mmbtu, but this is yet to be confirmed.

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