India's Vedanta issues two-year domestic gas tender

New York — India's Vedanta Limited, formerly known as Cairn Oil and Gas, issued a two-year sell tender for 4.5 million standard cu m/day, equivalent to 1.2 million mt of LNG/year, of gas supply from its RJ Block in Rajasthan.

The gas supply via the tender is expected to start from April 2021, with the e-auction to be held on March 19 at 11.30 am Indian Standard Time and the allocation of results on March 20, the company's request for proposal document showed.

The tender will be priced based on the previous monthly average of S&P Global Platts West India Marker, preceding the month of delivery. For example, the price for gas supply in April 2021 will consider the previous monthly prices for WIM published on March 31.

Platts WIM assessments roll forward to a new front month on the 16th of each month. The April 2021 WIM pricing period will be from Feb. 16 to March 15. Hence, the April WIM settlement price will be known from the March 15 Asian close onwards.

The price of the tender is to be quoted in $/MMBtu as a premium to WIM and has a price ceiling of 14% slope of three-month average of Dated Brent preceding to the month of delivery. Delivery point for the tender would be the outlet flange of the Raageshwari Gas Terminal, RJ-ON-90/1 Block, Rajasthan, as per Vedanta's RFP document.

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.

Reliance on Feb. 5 sold 7.5 million standard cu m/day of gas for a tenure of three to five years from its KG-D6 block at JKM minus 18 cents/MMBtu. 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. GSPC, Reliance and Arcelor Mittal Nippon Steel have also purchased spot LNG cargoes linked to JKM in the past.