Singapore — India's Vedanta Ltd. has awarded a two-year sell tender for 4.3 million standard cu m/day (mmcm/d) -- equivalent to 1.2 million mt of LNG/year -- of gas supply from its RJ Block in Rajasthan, at discounts of 18-20 cents/MMBtu to the West India Marker LNG benchmark, according to industry sources.
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Register NowThe gas supply via the tender, which closed on March 25, is expected to start from April 2021.
Gujarat State Petroleum Corp., or GSPC, was awarded the bulk of the volumes, for 3.8 mmcm/d at a price of Platts WIM minus $0.20/MMBtu, two market sources told S&P Global Platts.
Meanwhile, Gujarat State Fertilizer & Chemicals and Nayara Energy were awarded 0.2 mmcm/d each, while Enertek was awarded 0.1 mmcm/d of gas supply. These were to be priced at WIM minus $0.18/MMBtu.
The delivery point for the tender will be the outlet flange of the Raageshwari Gas Terminal, RJ-ON-90/1 Block, Rajasthan, as per Vedanta's RFP document.
Spokespersons at Vedanta did not respond to requests for official comment.
The tender will be priced based on the previous monthly average of WIM preceding the month of delivery. For example, the price for gas supply in April will consider the previous monthly prices for WIM published on March 31.
The final monthly average of April WIM, which had a pricing period from Feb. 16 to March 15, was at $5.793/MMBtu.
By comparison, Platts assessed an April average WIM RLNG price of $7.494/MMBtu for gas delivered to Kota, Rajasthan, imported via Dahej terminal and transported on the HVJ pipeline. This price does not account for VAT and CST sales taxes.
Vedanta's WIM-linked tender is part of a wider trend in the Indian gas and LNG market, as producers and LNG importers are issuing tenders and procuring LNG linked to spot LNG prices.
With LNG imports expected to account for a large percentage of natural gas supply in India, with LNG pricing represented by the WIM benchmark is seen as an anchor for deliveries into core demand areas.
ONGC has sold about 0.75 million standard cu m/day gas from its KG-D5 block to GAIL and HPCL linked to WIM.
Petronet LNG procured two spot LNG cargoes towards the end of 2020 linked to WIM.
December also marked the launch and trade of WIM LNG financial derivatives on the Intercontinental exchange.
Vedanta's tender is the second significant sell-tender for domestic gas concluded so far this year. Reliance on Feb. 5 sold 7.5 mmcm/day of gas for a tenure of three to five years from its KG-D6 block at JKM minus 18 cents/MMBtu.
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March 31, 2021 at 02:03PM
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India's Vedanta awards domestic gas tender at discount to WIM LNG benchmark: sources - S&P Global
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