It is reported that state owned Rashtriya Chemicals and Fertilizers Ltd has turned down a government offer to swap its cheaper KG-D6 gas from Reliance Industries for Oil and Natural Gas Corporation’s C Series gas.

RCF sources said there were many issues with the government’s proposal, including quantity, pressure and tenure of availability of gas from ONGC.

Senior RCF officials told Business Standard that “RCF is keen on a long-term availability, say a minimum of 15 years and in this regard, KG-D6 is the best bet. There is an issue of availability as far as ONGC’s C-Series gas is concerned. Also, the C-Series gas is of low pressure and the company would be required to spend more to boost it. There is no decision on swap.”

RCF procures 2.5 million standard cubic metres a day of gas at USD 4.2 per million British thermal unit from RIL. ONGC’s C-Series gas is priced at USD 5.25 per mBtu.

The delivered price of KG-D6 gas in the Trombay region is USD 6.54 per mBtu (including USD 0.12 towards marketing, USD 0.87 towards central sales tax of two per cent, USD 1.35 towards transportation through the east-west pipeline). On the other hand, the C-Series gas would cost RCF USD 6.76 per mBtu (including USD 0.12 towards marketing, USD 0.64 towards transportation through the GAIL pipeline and USD 0.75 towards local sales tax of 12.5%).

The officials said that “Availability of the quantity of C-Series gas is also an issue. In case of ONGC’s C-Series gas, whether the similar quantity will remain for a long-term was still unknown.”

(Sourced from BS)