 "Govt denies 10% cut in gas price, says it's 'mere speculation'")
The petroleum ministry on Wednesday said it was still computing a new domestic natural gas price, to be effective from April 1, dismissing reports of a likely 10 per cent cut in gas prices.
On Wednesday, a media report said prices were likely to fall 10 per cent to $4.67 per million British thermal units (mBtu) on a gross calorific value (GCV) basis and $5.02 a unit on a net calorific value (NCV) basis.
“The 10 per cent cut in gas price is mere speculation. The petroleum planning and analysis cell is still processing data to calculate the new price,” a senior ministry source told Business Standard. “We will announce the new price in 10 days,” he added.
The ministry said it expected the new price to be lower than the current $5.6 per mBtu on a net calorific basis, owing to a slump in global liquefied natural gas (LNG) prices in the past few months.
Any change in the natural gas prices will impact major producers, including Oil and Natural gas Corporation (ONGC) and Reliance Industries Ltd. For ONGC, every $1 rise in prices will mean an additional Rs 4,000 crore of revenue and Rs 2,300 crore of profit after tax, apart from rates of gas-based power plants, fertilizer costs, CNG rates and PNG prices.
An ONGC official said with crude oil prices down, a gas price cut was likely. However, there is no clarity on the extent of the cut. “A downward revision in gas prices would certainly impact ONGC’s bottom line but it would be too early to predict the quantum, as the price cut is still not clear,” he added.
The price of natural gas in India, reviewed every six months, is applicable to all gas produced from nomination fields of ONGC and Oil India, New Exploration Licensing Policy (NELP) blocks, a few pre-NELP blocks and coal bed methane blocks.
In October, the government had increased gas price from $4.2 an mBtu, based on an NCV basis to $5.61 an mBtu. On a GCV basis, the respective prices had increased from $3.79 an mBtu to $5.05 an mBtu.
The new gas prices are based on a formula devised by a committee of secretaries headed by power secretary P K Sinha. The committee had adjusted an earlier formula, arrived at by a panel headed by former Prime Minister’s Economic Advisory Council chairman C Rangarajan, which had proposed doubling the prices to $8.4 an mBtu.
India’s gas production fell 13 per cent from 111 million standard cubic metres a day (mscmd) in 2012-13 to 97 mscmd in 2013-14. It is expected the output will increase to 100 mscmd this financial year.
On Wednesday, a media report said prices were likely to fall 10 per cent to $4.67 per million British thermal units (mBtu) on a gross calorific value (GCV) basis and $5.02 a unit on a net calorific value (NCV) basis.
“The 10 per cent cut in gas price is mere speculation. The petroleum planning and analysis cell is still processing data to calculate the new price,” a senior ministry source told Business Standard. “We will announce the new price in 10 days,” he added.
The ministry said it expected the new price to be lower than the current $5.6 per mBtu on a net calorific basis, owing to a slump in global liquefied natural gas (LNG) prices in the past few months.
Any change in the natural gas prices will impact major producers, including Oil and Natural gas Corporation (ONGC) and Reliance Industries Ltd. For ONGC, every $1 rise in prices will mean an additional Rs 4,000 crore of revenue and Rs 2,300 crore of profit after tax, apart from rates of gas-based power plants, fertilizer costs, CNG rates and PNG prices.
An ONGC official said with crude oil prices down, a gas price cut was likely. However, there is no clarity on the extent of the cut. “A downward revision in gas prices would certainly impact ONGC’s bottom line but it would be too early to predict the quantum, as the price cut is still not clear,” he added.
The price of natural gas in India, reviewed every six months, is applicable to all gas produced from nomination fields of ONGC and Oil India, New Exploration Licensing Policy (NELP) blocks, a few pre-NELP blocks and coal bed methane blocks.
In October, the government had increased gas price from $4.2 an mBtu, based on an NCV basis to $5.61 an mBtu. On a GCV basis, the respective prices had increased from $3.79 an mBtu to $5.05 an mBtu.
The new gas prices are based on a formula devised by a committee of secretaries headed by power secretary P K Sinha. The committee had adjusted an earlier formula, arrived at by a panel headed by former Prime Minister’s Economic Advisory Council chairman C Rangarajan, which had proposed doubling the prices to $8.4 an mBtu.
India’s gas production fell 13 per cent from 111 million standard cubic metres a day (mscmd) in 2012-13 to 97 mscmd in 2013-14. It is expected the output will increase to 100 mscmd this financial year.