IF BELOW ANALYSIS IS TRUE... BETTER SELL RNRL AT THIS LEVEL
How much gas is RIL going to give?
According to initial agreement RIL has to give 28 mmscmd for 17 years.
The rate in the initial agreement was fixed at $2.34 per mmbtu.
This may go up to 40 mmscmd under certain conditions.
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mmscmd is "Million Standard Cubic Meter Per Day".
mmbtu is "Million British Thermal Units".
=================================
Now comes the first uncertainty.
RIL says it cannot supply 28 mmscmd at $2.34 per mmbtu.
This is the main dispute in the court case.
The reasons that RIL gives is
- RIL has only 4.4 trillion cubic feet (TCF) of certified proven reserves (CPR).
So how much is 4.4 TCF?
1 cubic meter = 35.3 cubic feet.
This CPR of RIL reserves = 4400/35.3 billion cubic meter.
= 4400000/35.3 million cubic meter.
= 124645 million cubic meter.
At 28 mmscmd, the reserves will last 4451 days. (12 years).
However, please not that RIL will be supplying to other companies too.
25 mmscmd will be used for RIL's own use and 12 mmscmd is supposed to go to NTPC.
Thus if RIL has an output of 28+25+12 mmscmd = 65 mmscmd, the reserves will get exhausted in 1917 days (little over 5 years).
So if 4.4 TCF figure is correct, there is no way RIL can supply gas to RNRL for 17 years.
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What is RNRL's argument?
RNRL has stated that...
=================================
RNRL has applied for gas distribution licenses for Mumbai and NCR.
However, there is a clause in the RIL - RNRL agreement, which does not allow RNRLto use the gas bought for RIL, for any other purpose, except power generation.
I really don't understand why markets have got excited by RNRL's gas distribution plans. There is no way Mukesh Ambani will permit RIL's gas to be used for gas distribution. Even if RNRL has to distribute gas, it will have buy gas from sources other than RIL.
How much gas is RIL going to give?
According to initial agreement RIL has to give 28 mmscmd for 17 years.
The rate in the initial agreement was fixed at $2.34 per mmbtu.
This may go up to 40 mmscmd under certain conditions.
=================================
mmscmd is "Million Standard Cubic Meter Per Day".
mmbtu is "Million British Thermal Units".
=================================
Now comes the first uncertainty.
RIL says it cannot supply 28 mmscmd at $2.34 per mmbtu.
This is the main dispute in the court case.
The reasons that RIL gives is
- RIL has only 4.4 trillion cubic feet (TCF) of certified proven reserves (CPR).
So how much is 4.4 TCF?
1 cubic meter = 35.3 cubic feet.
This CPR of RIL reserves = 4400/35.3 billion cubic meter.
= 4400000/35.3 million cubic meter.
= 124645 million cubic meter.
At 28 mmscmd, the reserves will last 4451 days. (12 years).
However, please not that RIL will be supplying to other companies too.
25 mmscmd will be used for RIL's own use and 12 mmscmd is supposed to go to NTPC.
Thus if RIL has an output of 28+25+12 mmscmd = 65 mmscmd, the reserves will get exhausted in 1917 days (little over 5 years).
So if 4.4 TCF figure is correct, there is no way RIL can supply gas to RNRL for 17 years.
=================================
What is RNRL's argument?
RNRL has stated that...
=================================
RNRL has applied for gas distribution licenses for Mumbai and NCR.
However, there is a clause in the RIL - RNRL agreement, which does not allow RNRLto use the gas bought for RIL, for any other purpose, except power generation.
I really don't understand why markets have got excited by RNRL's gas distribution plans. There is no way Mukesh Ambani will permit RIL's gas to be used for gas distribution. Even if RNRL has to distribute gas, it will have buy gas from sources other than RIL.