The Centre has nominated state-run GAIL to buy the gas output from Vedanta’s prolific Barmer block, which has recently begun pumping the energy resource after accounting for a fourth of India’s domestic crude oil production.
The block, which would produce up to 4 million metric standard cubic meters a day (mmscmd), must sell the output to an entity chosen by the government. The production sharing contract for the Barmer block gives the producer pricing freedom but not marketing freedom.
A long-drawn negotiation between GAIL and Vedanta hasn’t yet yielded an agreement, underscoring how hard it can be to settle on a rate in the absence of a widely acceptable domestic-market benchmark. Read More