Shares of three companies engaged in production of natural gas rose by 2.15% to 3.29% at 10:27 IST on BSE after the government on Friday, 10 January 2014, issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014.
Reliance Industries (up 2.15%), ONGC (up 2.89%) and Oil India (up 3.29%) gained.
Meanwhile, the BSE Sensex was up 284.57 points, or 1.37%, to 21,043.06
Shares of Reliance Industries, ONGC and Oil India gained after the government on Friday, 10 January 2014, issued the notification regarding Domestic Natural Gas Pricing Guidelines, 2014.
The new gas pricing norms will be applicable to all natural gas produced domestically, irrespective of the source, whether conventional, shale, CBM etc. These guidelines will be applicable from 1 April 2014. The new gas pricing norms shall be applicable to all consuming sectors uniformly, the Ministry of Petroleum & Natural Gas said in a statement on Friday, 10 January 2014. These guidelines shall also be applicable for natural gas produced by ONGC/Oil India from their nominated fields, it said.
First, the netback price of all Indian imports at the wellhead of the exporting countries will be estimated. Since there may be several sources of gas imports, the weighted average of such netback of import prices at the wellheads would represent the average global price for Indian LNG imports, the oil ministry said explaining the methodology of gas price calculation. Secondly, the weighted average of prices prevailing at trading points of transactions - i.e., the hubs or balancing points of the major global markets will be estimated. For this, (a) the hub price (at the Henry Hub) in the US (for North America), (b) the price at the National Balancing Point of the UK (for Europe), and (c) the netback wellhead price at the sources of supply for Japan will be taken as the average price for producers at their supply points across continents. Finally, the simple average of the prices arrived at through the aforementioned two methods will be determined as the price for domestically produced natural gas in India.
Domestic gas prices shall be notified in advance on a quarterly basis using the data for four quarters, with a lag of one quarter, the oil ministry said. In respect of D1 and D3 gas discoveries of Block KG-DWN-98/3, these guidelines shall be applicable subject to submission of bank guarantees in the manner to be notified separately, it said.
More From This Section
The extant gas pricing policy under NELP was earlier approved by the Government for five years commencing from April 2009 and is due for revision with effect from April 2014. The Government had constituted a Committee headed by Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister in May 2012, to look into "the Production Sharing Contract (PSC) mechanism in petroleum industry". The Terms of Reference (TOR) of the Committee included, among others, formulating a structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation. The Committee submitted its report in December 2012. Based on Committee Report, Government of India (GOI) approved the Natural Gas Pricing Guidelines in its meeting held on 27 June 2013.
In pursuance of the earlier decision, GOI on 19 December 2013 approved applicability of the Guidelines for D1 and D3 gas discoveries of the NELP Block KG-DWN-98/3, subject to submission of bank guarantees that will be notified separately, the Ministry of Petroleum & Natural Gas said in a statement.
Meanwhile, the Ministry of Petroleum and Natural Gas on Sunday, 12 January 2014, showcased 46 onshore and offshore hydrocarbon exploration blocks which have so far been finalized for auction in the Tenth round of the New Exploration Licensing Policy (NELP-X). Chairing the session to announce these blocks at the oil and gas industry event Petrotech 2014 at Greater Noida, Petroleum Minister Dr Verappa Moily said that more blocks will be identified and added to the Notice Inviting Offer (NIO). He said that the tender documents will be announced later while the prospective investors could take advantage of the advance information about these blocks.
Dr Moily invited various investors to take advantage of the vast investment opportunities in the Indian oil and gas sector. These are the blocks which have received all statutory clearances. Under NELP, 360 exploration blocks have been offered so far and 254 blocks have been awarded. Presently, 148 blocks are active and 106 have been relinquished.
Powered by Capital Market - Live News