The fertiliser ministry has opposed Reliance Industries' demand for hiking the KG-D6 gas price in line with the Asian LNG spot price, effective from April 2014. The ministry wants the price to be not more than $8/mmBtu.

RIL pitched for the gas price, post March 2014, to be about 10% below the spot price of LNG imported from Qatar — $12-13 at current rates. According to sources, during discussions with the government, the fertiliser ministry contended that such a price (on which consumers will have to pay an extra $1-1.5 to cover transporation charges and marketing margins) is not viable for the fertiliser industry whose output is highly subsidised, adding that any such move will cause a burden on the exchequer.

Coal India (CIL) may be allowed to extract coal-bed methane (CBM) from its vast leasehold mining areas soon, opening new business avenues and boosting revenues for the state-owned coal monopoly. Current rules prohibit coal miners from extracting methane released during the mining process, wasting a valuable natural resource.

“We have given in-principle approval to a new policy on coal mine methane. We will soon move a Cabinet note to allow CBM extraction by CIL,” a petroleum ministry official said.

New Delhi The petroleum ministry will soon come out with a policy on setting up LNG infrastructure in the country to expedite the development of the domestic gas market, hobbled by the wide gap between demand and indigenous production of the green fuel.

While the petroleum and natural gas regulatory board (PNGRB) has the power to authorise development of LNG terminals, there is no policy that could provide clarity to investors looking at putting their money in the sector.

New Delhi They can do so by paying a fee, but must sell the mined fuel back to govt at a discount

Stepping up the gas on coal production, the government proposes to allow companies exploring coal bed methane (CBM) to simultaneously mine coal from the same block. Permission may be given to both existing and new operators of CBM blocks to undertake coal mining in the same fields. As of now, CBM blocks, characteristically much larger than coal blocks, cannot be mined for coal until the gas venture is completed and the field surrendered to the government after the 35-year lease. This has reduced the area for coal mining for a long duration, increasing pressure on coal companies facing stagnant production.

New Delhi In a bid to protect its revenue stream and maintain margins while fulfilling its obligations to supply higher level of coal to the power sector under the new fuel supply agreement, Coal India is going in for an aggressive strategy to step up output. The focus will be on increasing the supply of washed coal to the consumers commanding a premium pricing.

The company, which is producing about 22 million tonne of washed coal at present, expects to take up production to about 300 mt or over 50% of its total coal production by over next few years.

New Delhi Reliance is expected to source ultra heavy crude from the Orinoco oil belt

The country’s largest private oil and gas explorer, Reliance Industries, signed a 15-year oil supply contract with Venezuela’s state oil company, PDVSA, in Caracas on Tuesday. Venezuela’s Orinoco oil belt is expected to supply up to 400,000 barrels of crude oil per day to India to boost energy requirements of the country. Reliance is supposed to source ultra heavy crude from the Orinoco oil belt that will also help Venezuelan state-owned petroleum company to increase production.

New Delhi Consumers will have to pay the full market rate — R750 at current prices — for every LPG cylinder from April 2013 as the government gears up to directly transfer the subsidy on this fuel to consumers’ accounts starting next fiscal.

LPG users will get the subsidy on six cylinders in their bank accounts thanks to the unique identity (Aadhar) number that each consumer will be given. Going by the differential between the cost price and selling price of LPG cylinders over the last couple of years, the annual subsidy payment by the government for each consumer could be around R1,800.

New Delhi Rising global crude oil prices over the last four years have inflated India’s subsidy bill, but the burden on the exchequer could have been higher hadn't the fiscally-conscious government reduced its share of the onus, at the cost of upstream oil companies.

According to official data, between 2008-09 and 2011-12, the Centre reduced its direct funding of oil marketing companies’ losses — from 69.02% of the total estimated under-recoveries to 46.24%. Consequently, upstream firms such as ONGC, OIL and GAIL funded 38% of the under-recoveries in 2011-12, as against 30.98% in 2008-09.

New Delhi Falling KG-D6 output, costly imported LNG hem in power plants

India's gas-based power stations are facing an uncertain future. Depleting output from Reliance Industries’ KG-D6 block and non-availability of adequate infrastructure to handle liquefied natural gas (LNG) imports are set to trigger suspension of about 7,000 MW of generating capacity, further widening the large gap between power demand and supply.

New Delhi The oil ministry may seek the approval of Cabinet Committee of Economic Affairs on the long pending issue of coal bed methane (CBM) gas pricing of Reliance Industries and Essar Oil.

“A committee of secretaries is finalising the CBM pricing for the two companies and once its report is approved by the oil ministry a cabinet note would be moved,” a senior oil ministry official said on condition of anonymity.