Niko Confirms Government of India Approval of Increased Gas Price for D6 Gas
CALGARY, ALBERTA -- (Marketwired) -- 07/03/13 -- Niko Resources Ltd.
(TSX:NKO) ("Niko" or the "Company") confirms that the Cabinet
Committee of Economic Affairs ("CCEA") of the Government of India has
approved a new pricing formula for domestic gas sales in India.
The pricing formula is based on the average of the prices of imported
liquefied natural gas ("LNG") into India and the weighted average of
gas prices in North America, Europe and Japan, as follows:
-- PAV = (PIAV + PWAV) / 2
-- PAV = Sales price for domestic natural gas sales in India
-- PIAV = Netback price of Indian LNG term imports (excluding spot
-- PWAV = Weighted average of prevailing gas prices in global markets,
-- Henry Hub gas price in U.S. and total volumes consumed in North
-- National Balancing Point ("NBP") gas price in U.K. and total
volume consumed in Europe and Eurasia
-- Netback price of Japanese LNG imports and total volume imported
The pricing formula will be effective on April 1, 2014 for a period
of five years, with the price to be revised quarterly using the
approved formula. The price for each quarter will be calculated based
on the 12 month trailing average price with a lag of one quarter
(i.e. the price for April to June 2014 will be calculated based on
the averages for the 12 months ended December 31, 2013).
At the present time, the Indian LNG term imports relate primarily to
the Petronet LNG Limited contract ("Petronet") with RasGas of Qatar.
Per the Rangarajan Committee Report, the pricing terms of this
contract are as follows:
-- FOB = Po x JCCt / $15
-- Po = $1.90 / MMBTU (therefore, FOB = 12.67% x JCCt)
-- JCCt = 12 trailing month average Japan Customs-cleared Crude (JCC)
price, subject to a floor and ceiling:
-- Floor = ((60 - N) x $20 + (N x A60)) / 60 - $4
-- Ceiling = ((60 - N) x $20 + (N x A60)) / 60 + $4
-- N = 1 for January 2009, increasing by 1 every month until
December 2013 after which it remains at 60
-- A60 = 60 trailing month average price of JCC
In the future, the Indian LNG term imports are expected to include
imports related to the Petronet contract with ExxonMobil for import
of LNG from the Gorgon venture in Australia. Per the Rangarajan
Committee Report, the terms of this contract are as follows:
-- FOB = 14.5% x JCC
Estimated liquefaction and transportation costs of $3.00 / MMbtu for
older LNG facilities (pre-2010) or $4.00 / MMbtu for newer LNG
facilities are to be deducted to arrive at the netback price for
Indian LNG term imports.
Using the approved price formula, the price effective for April 1,
2014 is estimated at around $8.40 / MMbtu, double the price of $4.20
/ MMbtu for current gas sales from the D6 Block. The pricing terms of
the Petronet contracts are expected to result in further increases in
the gas prices in future quarters, assuming current pricing levels of
JCC, U.S. Henry Hub, U.K. NBP and Japan LNG imports.
Certain statements in this press release constitute forward-looking
information. These forward-looking statements are based on certain
key expectations and assumptions of management. The reader is
cautioned that the assumptions used in the preparation of such
forward-looking information, although considered reasonable at the
time of preparation, may prove to be incorrect. Actual results
achieved may vary from the information provided herein as a result of
numerous known and unknown risks and uncertainties and other factors
and such variations may be material.
Niko Resources Ltd.
Chairman of the Board, President & CEO
Niko Resources Ltd.
VP Finance & CFO
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