Vedanta has invited bids for natural gas from its Rajasthan block at a floor price of $9.57 per mmBtu. Vedanta plans to sell 3 million metric standard cubic meters a day (mmscmd) of gas in an auction slated for January 18, according to the e-auction document. The supply will be offered for a year beginning April 1 from Raageshwari gas terminal at Barmer, Rajasthan.
The floor price will be one dollar above the domestic formula price, which is revised every six months and is currently at $8.57 per mmBtu. The sale price will be the lower of Platts LNG West Indiamarker or 15.25% of the average Brent price plus a premium that bidders would quote.
At the current Brent price of $82 per barrel and zero premium, the sale price would be $12.5 per mmBtu. Vedanta enjoys pricing freedom for the gas it produces from its Rajasthan block. Most producing fields in the country don’t have pricing freedom and their gas is sold at the domestic formula price. Gas from difficult fields can be sold at market rates subject to a ceiling, which is currently at $12.46 per mmBtu.