Vedanta seeks minimum $19 for gas from the Gujarat block

Billionaire Anil Agarwal’s Vedanta Ltd is seeking a minimum $19 price for natural gas produced from a field off Gujarat as it looks to cash in on the recent surge in global energy prices.

The firm has called for bids for the sale of 0.25 million standard cubic meters/day of gas produced from CB/OS-2 block located in Suvali, Surat district of Gujarat. Bids have been sought based on the average monthly price of Brent crude oil and Platts’ West India Marker (WIM) for liquefied natural gas (LNG) shipments.

The sale price will be lower than Platts LNG WIM + 1.0 or a premium over 16.67% average Brent crude oil price. At the current trading price of $117.68 per barrel for Brent crude oil, the floor price comes to $19.6 per million British thermal units. To this, buyers will have to bid a premium. Platts WIM closed at $32.275 per mmBtu on March 21 and if this benchmark is considered, the selling price will be $33.275.

The floor price will however be not lower than the government-administered price for gas, which currently is $2.9 per mmBtu. While Vedanta holds 40% interest in the CB-OS/2 block, ONGC has 40 per cent. The balance of 10% is held by Tata Ptrodyne Ltd. Hindustan Oil Exploration Company (HOEC) sold 0.3 mmscmd of gas to Gujarat State Petroleum Corp (GSPC) at a price of around 22% of Brent.

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