Over 2-fold hike in domestic natural gas prices for Apr-Sep
Premium- The price of domestic natural gas for the six months starting April 1 has been fixed at $6.10 per mmBtu from $2.90 per mmBtu for the second half of FY22
NEW DELHI : The union ministry of petroleum and natural gas on Thursday increased the price of natural gas produced in the country by more than two-fold for April-September period of FY23.
The price of domestic natural gas for the six months starting April 1 has been fixed at $6.10 per million British thermal unit (mmBtu) from $2.90 per mmBtu for the second half of FY22. This price will be applicable for he regulated gas fields of state-run majors ONGC and Oil India Ltd.
In a notification sent to ONGC, OIL and the Director General of the Directorate General of Hydrocarbons, the Petroleum Planning & Analysis Cell said: "The price of domestic natural gas for the period April 1, 2022 to September 30, 2022 is $6.10/MMBTU on Gross Calorific Value (GCV) basis.
In another notification, PPAC, which comes under the petroleum ministry, said that the price ceiling for the gas discovered in difficult fields, such as deepwater, ultra deepwater and high pressure-high temperature areas for the first half of FY23 would be $9.92 per mmBtu on GCV basis, up from 6.13 per mmBtu in October-March FY22.
The increase in prices comes on the backdrop of surge in global energy prices amid the Russia-Ukraine conflict.
Prashant Vasisht, Vice President and Co-Head, Corporate Ratings, ICRA said: “The domestic gas price increase was driven by the significant run up in the prices of gas at global gas hubs. The increase in gas prices provides relief to Indian upstream producers as at earlier prices, gas production was a loss-making proposition for most fields for the Indian upstream producers."
Although the increase in prices is expected to provide a boost to the upstream companies, it may be a cause of worry for the inflation scenario. The hike is expected to be transferred to prices of gas supplied to households, industries, the power sector and fertiliser firms.
The inflation rate in the country is already high and above the tolerance level of the Reserve Bank of India. Consumer price index which reflects the retail inflation stood at 6.7% in February.
MINT PREMIUM See All
A recent report by Crisil showed that the domestic demand for natural gas is seen rising 12-14% upcoming financial year despite prices remaining high.
Russia’s invasion of Ukraine, which began in February 2022, drove already-elevated gas prices even higher globally. Russia accounts for 17% of global gas output, and its pipeline via Ukraine caters to more than a third of European gas demand, said the report.
The heightened supply uncertainty because of the ongoing conflict and Europe’s intensifying efforts to reduce dependence on Russian gas by importing more LNG will keep gas prices high at least in the near term, it added.
"India will feel the heat, too, as domestically produced gas, which meets half of the total gas demand, is linked to prices at international gas trading hubs. The balance demand is met by term and spot LNG imports," the Crisil report had said.
Download the App to get 14 days of unlimited access to Mint Premium absolutely free!