New Delhi: In line with the softening of international benchmark gas prices, the price of natural gas produced from difficult fields like Reliance Industries’ deep sea KG-D6 block was cut by a massive 18 per cent on Sunday. This information has been given in an official notification. However, there has been no change in the prices of the gas used to make widely used vehicle fuel CNG and piped cooking gas PNG.
The price of this gas is fixed at 30 percent less than the market rate paid to Reliance. A notification issued by the Petroleum Planning and Analysis Cell (PPAC) of the Petroleum Ministry said that the price of gas from deep sea and high pressure, high temperature (HPTP) fields for a period of six months starting October 1 will be Rs. 12.12. It has been reduced from US dollar to $9.96 per million British thermal units (MMBTU).
The government sets the prices of locally produced natural gas twice a year. This gas is converted into CNG for use in vehicles and PNG for kitchen use. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) has two different formulas for payment for gas produced from old fields and gas produced from difficult new fields.
Gas rates are decided every year on 1st April and 1st October. On April 1 this year, the formula for monitoring old fields was changed and it was ‘indexed’ at 10 per cent of the current Brent crude oil price. However, the price limit for this was set at $6.5 per unit. Rates for the old areas are now decided on a monthly basis. The price for September was $8.60 per mmBtu, but due to the cap, producers will get only $6.5 per unit.
The price for September was US$9.2 per mmBtu, but due to the cap consumers will continue to pay $6.5 per unit to ONGC and OIL. The average price of Brent crude this month has been around $92 a barrel, but rates will remain capped at $6.5. Sources said the price of hard-field gas continues to be governed by the old formula, which includes a year of international LNG prices. The average of rates is taken at a quarter interval at some global gas hubs.
He said international prices had declined in the reference period of July, 2022 to June, 2023 and hence this would translate into lower prices for the austere sectors. The price of gas from difficult fields was reduced to $ 12.12 per unit for a six-month period starting April 1, from the earlier record of $ 12.46. It is noteworthy that India is aiming to become a gas-based economy. A target has been set to increase the share of natural gas in India’s energy mix to 15 percent by 2030, which is currently 6.3 percent.