In a bonanza for gas producers, Reliance Industries is set to get a record price of around USD 10 per MMBtu for the KG gas, while state-owned ONGC is likely to fetch more than double the rate for its Mumbai High and other fields, sources said.<\/p>\n
The government-dictated price for natural gas produced in the country is to be revised on April 1 and factoring in the spike in energy prices witnessed last year, the rate paid for gas produced from fields given to state-owned Oil and Natural Gas Corporation (ONGC) on nomination basis is likely to rise to USD 5.93 per million British thermal units from current USD 2.9.<\/p>\n
Simultaneously, difficult fields like the ones in Reliance and its partner bp plc operated D6 block in KG basin, are likely to get USD 9.9-10.1 price compared to the current rate of USD 6.13, two sources aware of the matter said.<\/p>\n
These are the highest rates for administered\/regulated fields (like ONGC’s Bassein field off the Mumbai coast) and free-market areas (such as the KG basin).<\/p>\n
Also, this will be the second increase in rates since April 2019 and comes on the back of firming benchmark international prices.<\/p>\n
The government sets the price of gas every six months — on April 1 and October 1 — each year based on rates prevalent in gas surplus nations such as the US, Canada and Russia in one year with a lag of one quarter.<\/p>\n
So, the price for April 1 to September 30 is based on the average price from January 2021 to December 2021. This is the period when global rates shot through the roofs.<\/p>\n
The volume-weighted average of the price prevalent in a 12-month period in US-based Henry Hub, Canada-based Alberta gas, UK-based NBP and Russia gas are used to fix price for administered fields of ONGC and Oil India Ltd.<\/p>\n
For difficult fields like discoveries in deepwater, ultra-deepwater and high pressure-high temperature areas, a slightly modified formula is used by incorporating the price of LNG, which too had shot through the roof in 2021.<\/p>\n
Reliance-bp operated KG fields are classified as difficult fields.<\/p>\n
The sources said the increase in gas price is likely to result in a rise in CNG and piped cooking gas rates in cities, such as Delhi and Mumbai.<\/p>\n
It will also lead to a rise in the cost of generating electricity but consumers may not feel any major pinch as the share of power produced from gas is very low.<\/p>\n
Similarly, the cost of producing fertiliser will also go up but as the government subsidises the crop nutrient, an increase in rates is unlikely.<\/p>\n
For producers, this will be the first time in six years that they will get a remunerative price.<\/p>\n
ONGC had been incurring losses on the 65 million standard cubic meters per day of gas it produces from domestic fields shortly after the government in November 2014 introduced a new gas pricing formula that had “inherent limitations” as it was based on pricing hubs of gas surplus countries such as the US, Canada, and Russia.<\/p>\n
The sources said ONGC had in several communications to the government has stated that the break-even price to produce gas from new discoveries was in the range of USD 5-9 per MMBtu and that for old fields such as Mumbai High and Bassein is about USD 3.6-3.7.<\/p>\n
The Congress-led UPA had approved a new pricing formula for implementation in 2014 that would have raised the rates, but the BJP-led government scrapped it and brought a new formula.<\/p>\n
The new formula takes into account the volume-weighted annual average of the prices prevailing in Henry Hub (US), National Balancing Point (the UK), Alberta (Canada), and Russia with a lag of one-quarter.<\/p>\n
The rate at the first revision, using the new formula, came to USD 5.05 but in the subsequent six-monthly reviews kept falling till it touched USD 2.48 for April 2017 to September 2017 period.<\/p>\n
Subsequently, it rose to USD 3.69 in April 2019-September 2019 before being cut in subsequent rounds to USD 1.79.<\/p>\n","protected":false},"excerpt":{"rendered":"
In a bonanza for gas producers, Reliance Industries is set to get a record price of around USD 10 per MMBtu for the KG gas, while state-owned ONGC is likely to fetch more than double the rate for its Mumbai High and other fields, sources said. The government-dictated price for natural gas produced in the country is to be revised on April 1 and factoring in the spike in energy prices witnessed last year, the rate paid for gas produced from fields given to state-owned Oil and Natural Gas Corporation (ONGC) on nomination basis is likely to rise to USD […]<\/p>\n","protected":false},"author":39,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[133],"tags":[],"class_list":["post-480398","post","type-post","status-publish","format-standard","hentry","category-oil-gas"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/480398","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=480398"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/480398\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=480398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=480398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=480398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}