The government does not regard the recent plunge in oil and gas prices as a normal market-driven fluctuation that should determine the economics of domestic producers, petroleum minister Dharmendra Pradhan said, responding to mounting concerns about viability of Indian fields as their prices are linked to global benchmarks.
“Normally prices respond to demand-supply imbalance, but the current situation is highly abnormal with unheard of low demand. The price is now moving towards normalcy. It will stabilise at $40-$45. We have to wait for that,” he told ET in an interview.
Domestic gas producers are worried about the impact of the abnormally low prices on the formula that determines local gas rates. Pradhan said he does not want Indian fields to become unviable although weak global prices would have an impact. “Producers should not make a loss. Companies like ONGC should not be hit … However, overall low gas prices in the market will impact the finances of all gas projects, including that of deep water,” he said.
Crude Bill may Fall by Rs 25,000 cr
Pradhan said there were also a positive aspect of the oil price crash. State refiners and oil marketing firms had deftly used the crash in crude prices to quickly tank up 20% of annual requirement that will save Rs 25,000 crore in the oil import bill.