Reliance and its companion UK”s BP Plc on Friday auctioned 7.5 million commonplace cubic metres per day of incremental fuel from the R-series fuel discipline within the KG-D6 block, benchmarking it to a fuel marker for the very first time within the nation.
The public sale was held beneath the liberalised value discovery guidelines notified by the federal government that allowed associates of the fuel producer to bid and purchase pure fuel.
Reliance O2C, an affiliate of Reliance, picked up 4.Eight mmscmd of fuel in Friday”s public sale that lasted for seven-and-a-half-hours, sources with direct information of the event mentioned.
State fuel utility GAIL (India) Ltd received 0.85 mmscmd of provides whereas Shell picked up 0.7 mmscmd. Adani Complete Gasoline Ltd bought 0.1 mmscmd, Hindustan Petroleum Company Ltd (HPCL) 0.2 mmscmd and Torrest Gasoline 0.02 mmscmd.
Different patrons embrace IRM Power (0.1 mmscmd), PIL (0.35 mmscmd) and IGS (0.35 mmscmd), they mentioned.
Sources mentioned the fuel was purchased at a value of USD 0.18 per million British thermal unit low cost to JKM i.e. value of JKM (minus) USD 0.18 with tenures starting from Three to five years.
Reliance didn’t reply to electronic mail despatched for feedback.
Reliance O2C is the brand new unit that holds the agency”s refinery and petrochemical belongings.
E-bidding course of was performed by means of a web-based web-based digital bidding platform by CRISIL Danger and Infrastructure Options Restricted (CRIS), an impartial company empanelled by Directorate Basic of Hydrocarbons (DGH). CRIS partnered with e-Procurement Applied sciences Restricted (EPTL) and developed e-bidding platform.
The bidding course of was carried out as per the rules notified by the federal government in October 2020.
Sources mentioned the bidding course of on the market of fuel was launched on December 30, 2020 and it witnessed participation from round 15 bidders from metropolis fuel distribution sector, metal, energy, refineries, petrochemicals, resellers and different industries.
The e-bidding course of required bidders to submit their value bids linked to worldwide LNG value benchmark JKM (Japan Korea Marker). The JKM represents value for spot LNG delivered in Asian market and is now being broadly utilized in LNG trade as a marker for in medium/ long run LNG contracts as an alternative of conventional linkage to grease.
This was second time Reliance-BP performed an e-bidding course of which ran on a dynamic ahead public sale foundation on the market of KG-D6 fuel. Earlier in November 2019, 5 mmscmd of pure fuel was bought at value in vary of round 8.6 per cent of Brent crude oil for tenure starting from 2 to six years.
Reliance-BP began manufacturing of fuel on December 18 final yr from the R Cluster ultra-deep-water fuel discipline in block KG D6 off the east coast of India.
The duo growing three deep-water fuel tasks in block KG-D6 — R Cluster, Satellites Cluster and MJ — which collectively are anticipated to fulfill round 15 per cent of India”s fuel demand by 2023.
R Cluster is the primary of the three tasks to return onstream and is the deepest offshore fuel discipline in Asia.
E-bidding public sale guidelines requested bidders to “quote the variable denoted as ”V” in USD per million British thermal unit (MMBtu) phrases.”
“The fuel value (in USD/MMBtu (GCV)) shall be = JKM + V,” the bidding discover mentioned.
GCV stands for gross calorific worth.
”V” generally is a optimistic, zero or detrimental quantity and as much as two decimal locations nevertheless it can’t be lower than (-)0.30 USD/MMBtu, it mentioned.
This implies customers should quote -0.30 or increased worth of ”V”.
If JKM averaged USD 6 per MMBtu, the worth will probably be USD 5.82 per MMBtu.
However Reliance-BP will solely get the federal government notified cap value for fuel from deep-sea fields.
Pricing of fuel at JKM would be the first time that domestically produced fuel is being bought at charges linked to a world fuel benchmark, trade sources mentioned.
Additionally, this would be the first discovery of fuel value for the reason that October 2020 resolution of the federal government setting out uniform e-bidding norms for locating the market value.
That Cupboard resolution additionally allowed the sale of fuel to ”associates” and so whereas Reliance-BP affiliate corporations couldn”t take part within the November 2019 value discovery, they did in e-bidding on February 5.
The federal government has given operators the liberty to find market costs however this price is topic to a pricing ceiling or cap that the federal government notifies each six months. The cap for six months to March 31, 2021, is USD 4.06 per mmBtu.
And accordingly, Reliance-BP would get solely that quantity for the fuel.
Essar Metal, Adani Group and state-owned GAIL in November 2019 purchased the vast majority of the preliminary 5 mmscmd of fuel deliberate to be produced from R-Collection within the KG-D6 block by bidding between 8.5 and eight.6 per cent of dated Brent value.
In that bidding, Reliance-BP had requested fuel customers to cite a value (expressed as a share of the dated Brent crude oil price), provide interval and the quantity of fuel required.
A ground or minimal quote of 8.Four per cent of dated Brent value was set, which meant that bidders needed to quote 8.Four per cent or the next share for securing fuel provides.
Dated Brent means the typical of revealed Brent costs for 3 calendar months instantly previous the related contract month during which fuel provides are made.
Reliance bought USD 4.205 per MMBtu for fuel from D1 and D3 and MA fields throughout April 2019 and March 2014. It will have gotten double of that price if a brand new method proposed by the Rangarajan committee was permitted however the brand new BJP authorities scrapped it and introduced a brand new method on pricing fuel at charges prevalent in export surplus nations such because the US and Russia.
The charges got here to USD 5.05 in 2014 and are at the moment at USD 1.79 per mmBtu.
Reliance-BP is investing USD 5 billion in bringing to manufacturing three deepwater fuel tasks in block KG-D6 R-Cluster, Satellites Cluster, and MJ which collectively are anticipated to fulfill about 15 per cent of India”s fuel demand by 2023.
R-Cluster could have a peak output of 12.9 mmscmd whereas satellites, that are supposed to start output from the third quarter of the 2021 calendar yr, would produce a most of seven mmscmd. MJ discipline will begin manufacturing within the third quarter of 2022 and could have a peak output of 12 mmscmd.
Reliance has to date made 19 fuel discoveries within the KG-D6 block. Of those, D-1 and D-3 — the most important among the many lot — have been introduced into manufacturing from April 2009 and MA, the one oilfield within the block was put to manufacturing in September 2008.
Whereas the MA discipline stopped producing final yr, output from D-1 and D-Three ceased in February.
Different discoveries have both been surrendered or taken away by the federal government for not assembly timelines for starting manufacturing. Reliance is the operator of the block with 66.6 per cent curiosity whereas BP holds the remaining stake.