Financial Daily from THE HINDU group of publications
Tuesday, Feb 28, 2006
Industry & Economy - Petroleum
Gas supply issue: Meet today to resolve deadlock
Chiefs of Panna-Mukta venture partners, GAIL to participate
New Delhi , Feb. 27
The ongoing conflict between GAIL (India) Ltd and the joint venture partners of Panna-Mukta-Tapti (PMT) fields on allowing the former to continue selling six million standard cubic meter per day (MMSCMD) of gas from the latter is far from over.
The Petroleum Ministry has called a meeting of all the stakeholders, which includes the chiefs of the joint venture partners - ONGC, British Gas, and Reliance Industries - and GAIL this week to resolve the issue.
A final decision would be taken after the meeting, which is expected to be held on Tuesday, sources said.
The Secretary Petroleum, Mr M.S. Srinivasan, had held an internal meeting last Thursday to discuss the issue.
According to sources, a general consensus at the meeting was that GAIL should be allowed to sell six MMSCMD of gas from the PMT fields in the interests of the core sector fertiliser and power units.
The PMT partners had sought the Ministry's permission to sell six MMSCMD of gas from the fields, currently being given to GAIL, directly to clients at market price from April 2006.
GAIL and ONGC have been holding conflicting views on their claims on an agreement for selling gas beyond March 31 this year from the PMT fields.
ONGC has disputed GAIL's claims about an agreement to continue selling gas beyond March 31.
Quoting the production-sharing contract entered into in 1994 between the PMT joint venture consortium and the Government of India, GAIL has said that the natural gas produced from the PMT fields is first to be offered to the Government or its nominee. In January 1995, the Government nominated GAIL for the purchase of natural gas.
Currently, GAIL is purchasing about six MMSCMD of the PMT gas for supplying this entire quantity to 10 power and fertiliser consumers, including NTPC, NFL, and Pragati Power.
Moreover, it is supplying the entire quantity at an administered price mechanism price of Rs 3,200 per thousand standard cubic metres in compliance with the Gas Pricing Order of July 2005, without charging any marketing margin.
In November 2005, the Government has communicated to the PMT joint venture, followed by another reminder in February 2006, for extension of supplies of six MMSCMD of gas to GAIL beyond March 31 on the same broad terms, GAIL said.
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