Gail told to annul pacts for PMT gas
BG, IPCL and Torrent Power are among the gas consumers who may be left high and dry with the government directing Gail to cancel all long-term gas contracts for the Panna-Mukta-Tapti (PMT) fields.
By Rajeev Jayaswal, TNN |
NEW DELHI: BG, IPCL and Torrent Power are among the gas consumers who may be left high and dry with the government directing Gail to cancel all long-term gas contracts for the Panna-Mukta-Tapti (PMT) fields. The operators had entered into gas supply agreements for 15 years. An exception, however, is to be made for Rajasthan Rajya Vidyut Utpadan Nigam (RRVUNL).
“The long-term contracts, entered into by the JV collectively and as individual members, are to be cancelled and all quantities of these contracts are to be marked by Gail with immediate effect,” an official source said. All contracts, except for RRVUNL, would be terminated in March 2008.
“Gail shall be the government nominee under the production sharing contract (PSCs) for the entire PSC period to receive the entire gas produced from PMT fields at PSC price and terms. Any additional production from these fields shall also be received by Gail,” it added.
The cancellation of the contracts will come as a major blow to the consumers, who have pumped in investments in their projects banking on the fuel supplies. While BG was to draw 1.5 million standard cubic metres per day (mmscmd) of gas, IPCL was allocated 1.2 mmscmd. Torrent Power, on the other hand, had contracted 0.9 mmscmd. The price for this gas would vary between $4.75 and $5.7 per million british thermal unit (mmbtu).
Sources said the fuel would be diverted to the gas-starved fertiliser sector. It is learnt the petroleum ministry would direct Gail to market the gas to identified consumers on the basis of the forthcoming gas utilisation policy.
“However, contracts entered into by ONGC with RRVUNL shall be assigned to Gail on the same terms and conditions.
About 13 contracts for sale of about 16.4 mmscmd gas was signed by the PMT joint venture (BG, RIL and ONGC). Contracts differ in duration and pricing. JV partners directly signed gas supply contracts with companies.
Some of the contracts were signed for three years (April 2005 to March 2008) while long-term contracts entered into in 2005 are valid till 2019. These long-term contracts, except for the one executed by ONGC with RRVUNL, are stated to be illegal.
“The long-term contracts, entered into by the JV collectively and as individual members, are to be cancelled and all quantities of these contracts are to be marked by Gail with immediate effect,” an official source said. All contracts, except for RRVUNL, would be terminated in March 2008.
“Gail shall be the government nominee under the production sharing contract (PSCs) for the entire PSC period to receive the entire gas produced from PMT fields at PSC price and terms. Any additional production from these fields shall also be received by Gail,” it added.
The cancellation of the contracts will come as a major blow to the consumers, who have pumped in investments in their projects banking on the fuel supplies. While BG was to draw 1.5 million standard cubic metres per day (mmscmd) of gas, IPCL was allocated 1.2 mmscmd. Torrent Power, on the other hand, had contracted 0.9 mmscmd. The price for this gas would vary between $4.75 and $5.7 per million british thermal unit (mmbtu).
Sources said the fuel would be diverted to the gas-starved fertiliser sector. It is learnt the petroleum ministry would direct Gail to market the gas to identified consumers on the basis of the forthcoming gas utilisation policy.
“However, contracts entered into by ONGC with RRVUNL shall be assigned to Gail on the same terms and conditions.
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The project price payable for RRVUNL quantity shall be on back-to-back basis for the first three years of supply. After three years, the RRUVNL contract shall be revised to the then prevalent PSC price and Gail shall be entitled to marketing margin on this,” it added.About 13 contracts for sale of about 16.4 mmscmd gas was signed by the PMT joint venture (BG, RIL and ONGC). Contracts differ in duration and pricing. JV partners directly signed gas supply contracts with companies.
Some of the contracts were signed for three years (April 2005 to March 2008) while long-term contracts entered into in 2005 are valid till 2019. These long-term contracts, except for the one executed by ONGC with RRVUNL, are stated to be illegal.
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