GSPC had in October demanded "market determined price" for its ready-to-produce Deen Dayal West (DDW) fields in Bay of Bengal, saying the firm "cannot be put to irreparable harm by directing it to sell at a gas price which is less than the cost of gas production."

The company had asked the Oil Ministry to "nominate Gujarat Narmada Valley Fertilizer & Chemicals Ltd (GNFC) for supply of DDW field gas at price and delivery terms actually negotiated between GSPC and GNFC based on arm's length principles," Oil Minister Dharmandra Pradhan said.

In a written reply to a question in Rajya Sabha, he said GSPC informed the Ministry that GNFC had agreed to purchase gas produced from DDW field at USD 8.5 per million British thermal unit.

"In this regard, on November 14, this Ministry had decided that the matter of pricing of DDW gas would be as per the New Domestic Natural Gas Pricing Guidelines, 2014 notified on October 25, 2014," he said.

The price applicable under this guideline will be USD 5.05 per mmBtu on gross-calorific value (GCV) basis, he said.     

GSPC was in October ready to produce gas from DDW field but has so far not begun commercial production.

Ministry officials said though it initially sought higher price, the company has now given in writing that the new pricing guidelines are acceptable to it. But it hasn't yet started production.

"GSPC has not intimated about the start of commercial production of gas from its discoveries in the Block KG-OSN-2001/3 in KG Basin," Pradhan said.
    
As per the approved field development plan, initial production of 1 million standard cubic meters per day and peak output of 5 mmscmd is envisaged, he said.

GSPC had won the Block KG-OSN-2001/3 in the third round of auctions under New Exploration Licensing Policy (NELP), which was launched by the BJP-led NDA government, in 2003. DDW field in the block was discovered in 2005-06.

India is not endowed with rich natural resources and most of the reserves are in ultra-deep water, deepsea, and High Pressure-High Temperature (HPHT) areas which require investment of substantial capital to develop the gas fields, irrespective of time of discoveries.

Pradhan said a premium over the approved price will be given for all HPHT discoveries and finds made in ultra deepwater and deepwater areas after issuance of the pricing guidelines.

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