OIL & GAS

Time to re-examine domestic gas price formula

Questions are being raised on India’s gas pricing formula, after the latest price for local produce announced by the government on Wednesday. This was the third successive cut and the first slash which brought the price below $2 a unit (gas is measured in million British thermal units or mBtu).

The Ministry of Petroleum and Natural Gas on Wednesday announced the price of locally produced gas for the next six months from October to March 2021 at $1.79 per mBtu. The price ceiling for natural gas produced from difficult fields (high pressure-high temperature, deepwater and ultra deepwater discoveries) was also cut to $4.06 per mBtu.

Domestic gas producers are producing gas at a loss for the past two-three years because of a faulty benchmark decided by the government, argue industry players, stressing that it is time to relook at the existing formula.

India meets 50-55 per cent of its gas requirement through imports. The prevailing spot price of LNG is $5 per mBtu.

Source
the hindu businessline
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