India's ONGC issues 5-year CBM gas tenders linked to WIM, Dated Brent, Henry-Hub

Singapore — India's state-owned Oil and Natural Gas Corporation issued two 5-year supply tenders from its coalbed methane block in Jharkhand, linking it to a hybrid pricing formula of S&P Global Platts LNG West India Marker, Dated Brent and US's Henry Hub prices, the company's tender document showed.

The supply tenders each have a quantity of 10,000 standard cu m/day, with ONGC's indicative readiness to commence supply from Oct. 15, 2020 from its EPS-1 and EPS-2 Bokaro block. The Gross Calorific Value of the gas supplied would be 8,832.94 Kcal/cu m or 993.22 Btu/cu ft.

The reserve price for the tender would be notified by ONGC on a monthly basis on an ex-ONGC installation basis and the base price formula would be a weighted average price of 25% of Dated Brent with a slope of 10%, 25% Henry Hub price plus a $4.50/MMBtu constant and 50% of WIM. The reserve price of the tender would have $1/MMBtu premium to the base price calculated every month.

The base price would be computed based on the simple average of the daily prices published for the three preceding calendar months to the month of delivery. The reserve price for supply in September 2020 would be $4.96/MMBtu, calculations as per the tender document showed.

In comparison, the cumulative average price of West India Marker for spot LNG cargoes delivered in September was at $2.767/MMBtu, Platts data showed. However, spot LNG prices have strengthened since then due to supply uncertainty from Australia's Gorgon LNG facility, US cargo cancellations and firmer European gas and Henry-Hub prices. The cumulative average of WIM for October delivery cargoes was assessed at $4.089/MMBtu, Platts data showed.

The bids for the tender are due on Oct. 19, 2020, by 2 pm India Standard Time, the tender document showed.

ONGC had also issued a WIM linked tender in November 2019 for supplying 750,000 cu m/day of domestic gas from the offshore Krishna Godavari basin on the eastern coast of India.

Through its tender, ONGC had sold 100,000 cu m/day of gas from the KG Basin to HPCL at a premium of $1.01/MMBtu to the average of WIM of three months preceding to delivery, and another 550,000 cum/day to GAIL at a premium of around 57 cents/MMBtu to the Platts West India Marker of three months preceding to delivery, as reported by Platts earlier.