RIL has supply deals with NTPC

MUMBAI: Niko Resources has revised its estimate of the gas reserves in D6 block in KG basin by 197% to 35.4 trillion cubic feet from 11.9 trillion cubic feet. Finding and estimating gas reserves is one thing, while selling it is another.

Reliance has already tied up supply agreements with National Thermal Power Corporation (NTPC) and Reliance Natural Resources, but the agreements are under dispute. The gas is being sold at $3.11/mmbtu (million metric british thermal units), a price much below the current market price of natural gas internationally.

Of the $3.11, the pipeline tariff is 70 cents, which will be payable to the pipeline transportation company leaving RIL with a realisation of about $2.23 per mmbtu. RIL will have to share about 85% of the cash flow on the gas sales with the government, according to the production sharing agreement.

However, the sharing comes into effect after the company recovers 2.5 times its capex into the development of the project. A Niko statement said GCA has further estimated 8.2 tcf reserves in block NEC-25, off the Orissa coast. NEC-25 also has same shareholding as D6.

Niko reported a loss for fourth-quarter ended March 31 of C$17.5m ($15.6m), or 45 Canadian cents a share, after earning a profit of C$47.3m, or C$1.26 a share, a year ago. Niko said the loss was due to low production from other properties in India and the stronger Canadian dollar.