Domestically produced gas price likely to see upward revision come April
From April 1 the price of domestically produced gas is expected to rule higher on the back of an upward trend across different international hubs, including the indices used as benchmarks.
The six-monthly revision in government-stipulated prices of domestic gas is likely to boost the revenues of public-sector explorers and producers Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL) as well as private players including Bp-Reliance Industries.
“A $1 rise in the price per mBtu (million British thermal unit) will boost annual profit before tax by ₹4,300 crore for ONGC and ₹550 crore for OIL,” said Prashant Vasisht, Vice President and Co-Head, Corporate Ratings at ICRA Ltd.
In the last revision in October 2020, the price had sunk to a record low, having consecutively fallen for three turns amid the coronavirus pandemic. It currently stands at $1.79 per mBtu. For the production from discoveries in deepwater, ultra deepwater, and high pressure-high temperature areas, the government dictates a price ceiling, which is currently at a record low of $4.06 per mBtu.
Both public-sector and private oil and gas companies have long campaigned for changing the pricing formula
