The Hindu Business Line : GAIL signs gas deal for Panna Mukta

GAIL (India) Ltd on Wednesday signed a term sheet with the Panna-Mukta Tapti JV (PMT JV) for gas supplies from the PMT fields starting April 1 this year.

It will pay $4.75 for a million British thermal unit (MMBTU) for the gas from the PMT fields for two years, the company said in a statement. Last year, GAIL had bought the gas at $3.86 a MMBTU.

GAIL will buy about 5 million cubic metres of gas a day, the statement said. Last year, it got supplies of 6 million cubic metres a day. "As per provisions of the term sheet, the additional gas available after meeting the PMT JV contractual obligations including that of GAIL will be supplied to GAIL at $4.75/MMBTU on best endeavour basis. The term sheet provides for terms and conditions as generally found in gas sales contracts, including payment terms, quality, force majeure etc," the statement said.

Gas from the PMT fields will be supplied to power and fertiliser sector consumers. Last year, the Ministry of Petroleum and Natural Gas had directed that 6 million standard cubic metres per day (MMSCMD) of gas from the PMT fields be supplied to power and fertiliser customers at $3.86 per MMBTU from April 2005, while the JV was free to directly market the remaining volume of PMT gas to its own customers, the statement said. The Ministry had, at that time, directed a review of this arrangement after the completion of one year.

The PMT JV has a contractual obligation of supplying about 4.8 MMSCMD to its own customers (other than GAIL) ex-Hazira at a price of $4.08 per MMBTU, including marketing charges. The PMT JV term sheet with its direct customers commenced on April 1, 2005 and is valid till March 31, 2008.