State-run GAIL (India) has won a contract for buying coal-bed methane (CBM) gas produced from Essar Oil’s Raniganj block in West Bengal. The gas will be supplied based on the three-month daily average price of Brent crude oil, which works out to around $8 per million British thermal unit (mBtU) now.
Based on current prices, the 15-year contract will be around Rs 7 billion on an annual basis.
This comes a few months after Reliance Industries (RIL), which began commercial production of CBM from its two blocks in Madhya Pradesh, started buying CBM at around $7.8 mBtu.
Essar’s price is more than double the price of domestic natural gas set by the government till March 2018, which is $2.89 per mBtu. Great Eastern Energy and Oil and Natural Gas Corporation are the only CBM producers other than RIL and Essar. Read More…