Reliance Industries Ltd.
-0.85 (-0.06%) RIL seeks revision in gas price by $1 per mmbtu
Date: 15-09-2010Reliance Industries is seeking a revision in gas price from its Krishna Godavari block by $1 per mmbtu from current $4.2 per mmbtu. Among the reasons cited by the company is that as the cost of production is rising, customers are ready to pay higher price of gas.
The difference between the domestic gas price and imported gas price is still over $2 per mmbtu. Also the government appointed price of $4.2 per mmbtu from RIL's KG basin was set for a period of five years with a crude oil price of $60 per barrel as benchmark. But the crude oil price has risen to over $75 per barrel already.
The cost of production for oil exploration and production companies is also steadily rising with rig rates inching up. In fact, ONGC also told the oil ministry earlier this year that $4.2 per mmBtu is not a viable price for making future investments.
If oil ministry approves the gas price hike of $1 per mmbtu then it could add $500 million more to RIL's profits. Meanwhile RIL has capped the gas production from KG basin at 60 mmscmd citing technical reasons. It will resume production only once it has carried out the required safety audits. crackcrack