Oil and Natural Gas Corporation (ONGC) is seeking a premium over the government gas price for the gas it plans to produce from coal seams in Jharkhand. ONGC has sought bids from users for sale of 0.05 million standard cubic meters per day of gas from the North Karanpura coal-bed methane (CBM) block for three years.

According to the tender document, users were asked to quote an additional premium they are prepared to pay in excess of the monthly domestic gas price notified by the Petroleum Ministry’s (PPAC). On a monthly basis, Petroleum Planning and Analysis Cell (PPAC) publishes a price for most domestic produced natural gas, which is 10 percent of the average monthly import price of the crude oil basket that India imports into the country.

For January, Petroleum Planning and Analysis Cell (PPAC) reported a domestic gas price of $7.82/MBtu. Under ground gas is used to generate electricity, produce fertilisers or turn into CNG (compressed natural gas) for sale to cars and is piped to domestic kitchens for cooking.

“Bidders are required to quote ‘P’, which would be a positive non-zero premium over the Reserve Gas Price,” the ONGC tender document said.

The horse-shaped North Karanpur block has a surface area of 340 km2 and CBM resources are estimated to be around 62,000,000 cubic meters.

The e-auction will be held on the 7th of February