India’s ONGC issues gas tender linked to Platts LNG West India assessment

India’s Oil and Natural Gas Corporation issued a tender to supply 750,000 standard cu m/d of natural gas from December 26, 2019 onwardsfor three years from its eastern offshore gas field in Andhra Pradesh, the company’s tender document showed.

The pricing basis for the tender is linked to Platts LNG DES West India price assessments.
The reserve gas price for the tender would be calculated based on the simple average of daily Platts DES West India price for three months preceding the relevant month in which gas supplies are made plus a $1/MMBtu constant.

The bids are required to be quoted as a premium over the reserve gas price, which will be published by ONGC on a monthly basis in $/MMBtu.

Based on the above formula, the reserve price for November would be $5.93/MMBtu, Platts data showed.

In comparison, the Reliance and BP domestic gas tender’s reserve gas price — priced at 8.4% of Brent — for November would be around $5.08/MMBtu.

Price for the Reliance and BP domestic gas tender, bids for which are due November 6, is based on a lagged “3-0-1” pricing formula, with an average Dated Brent price of three months prior to the month of delivery.

The ONGC tender would be conducted over two bid rounds. The first bid round would assess the technical and commercial availability of bids and the second round would be price bids.

Bids for the tender are due November 12 and will be valid for 180 days from the date of opening of the un-priced bids, the tender document stated.

Natural gas produced from discoveries in deep-water, ultra deep-water and high pressure-high temperature areas, can be priced independently, but has a price ceiling of $8.43/MMBtu for October 2019 to March 2020. India’s Petroleum Planning and Analysis Cell sets the price ceiling bi-annually.

The ceiling price would be the lowest of imported prices of LNG, fuel oil or weighted average price of coal, fuel oil and naphtha.

The price of domestic natural gas was set at $3.23/MMBtu for October 2019 to March 2020 from regular gas fields, according to PPAC.
Source: Platts