The government is on the verge of announcing the premium to be paid on natural gas for all new discoveries in difficult deep-sea areas, Petroleum Minister Dharmendra Pradhan said on Monday.
"There is now an in-principle agreement over the issue of gas price premium between the ministry of petroleum and natural gas and the ministry of finance. It's resolved and it will come any day," he told reporters here.
While approving a new gas pricing formula in October 2014, the government had decided that new gas discoveries in deep-water, ultra-deep sea or high-temperature and high-pressure areas will be given a premium over and above the approved price.
Pradhan, who had recently met Finance Minister Arun Jaitley on the issue, said all issues are settled and an announcement can be made any day.
"It can be done any day, even today," he said.
In October 2014, the government announced an upward revision to $5.61 per unit against the industry's demand for at least doubling it to a little over $8 per unit, as per the Rangarajan Committee recommendations.
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However, accepting the recommendations would have meant a gas price of $8.4 per unit, instead of $5.6 effective from November 2014 for five months.
The new price per unit applied for normal categories of gas.
A petroleum ministry source told IANS that based on the recommendations of the Directorate General of Hydrocarbons, the ministry has proposed allowing a fixed percentage of gas produced from difficult fields to be sold at the market price and the rest as per the approved price.
While shallow-water blocks are at a depth of up to 100-500 metres, deep-water blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are classified as ultra-deep-water blocks.
These are the areas where the Reliance Industries-led consortium has maximum discoveries.
Reliance Industries will not immediately be able to avail the new price as it remains locked in an arbitration with the government over alleged shortfall in production from its Krishna-Godavari basin fields.
The government has announced a new rate, effective April 1, at $4.66 a unit - lowering it by 8 percent from the earlier $5.61 owing to lower international prices.
Natural gas producers, including state-run Oil and Natural Gas Corp, have said that it would be uneconomical to produce gas from difficult fields at the current price of $4.66.