Source: Economic Times India
Government-dictated price for natural gas produced by companies such as ONGC is likely to inch up marginally to USD 1.82 next week while the same for difficult fields like one operated by Reliance-BP may fall below USD 4, sources said.The price of gas, which is used to generate electricity, make fertiliser and convert into CNG for automobiles and cooking gas for households, is due to bi-annual revision next week.The rates paid for gas produced from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) are most likely to go up to USD 1.82 per million British thermal unit for six month period beginning April 1 from a decade low of USD 1.79 currently, two people aware of the matter said.Simultaneously, the price for gas produced from difficult fields such as deepsea, which is based on a different formula, is likely to fall below USD 4 per mmBtu from the current price of USD 4.06.This is the maximum price that Reliance Industries Ltd and its partner BP plc are entitled to for gas they produced from deepsea blocks they won under New Exploration Licensing Policy (NELP).While the government sets the price of gas produced by ONGC from fields given to it on a nomination basis, it bi-annually announces a cap or maximum price that operators who won exploration acreage under NELP can get.The operators are supposed to do a market price discovery by seeking bids from users but that rate is subject to the price ceiling announced by the government, they said.Reliance-BP had in recent price discovery for new gas from their Krishna Godavari basin block, got rates of over USD 6 per mmBtu but they would get less than USD 4 as per the pricing formula.Natural gas price is set every six months — on April 1 and October 1 — each year based on rates prevalent in surplus nations such as the US, Canada and Russia.At the last revision, the price was cut by 25 per cent to USD 1.79 per mmBtu for six months beginning October 1 from USD 2.39.
