The Hindu : Business : ONGC, OIL may get higher price for gas

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Tuesday, Mar 23, 2010
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ONGC, OIL may get higher price for gas

Special Correspondent

The Petroleum Ministry has circulated a Cabinet note for the move under the APM

NEW DELHI: The Centre on Monday hinted that the decision making process to hike the natural gas prices produced by state-run Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) by as much as 30 per cent was in the final stages.

“I have been told by Petroleum and Natural Gas Minister Murli Deora that the issue is in the final stages of decision making in the government. We expect a decision soon,'' Petroleum Secretary S. Sundareshan said on the sidelines of a summit here. The prices of gas produced by ONGC and OIL from fields given to them on a nomination basis were last revised in 2005. The current rates of Rs.3,200 per thousand cubic metres ($1.79 per million British thermal unit) were less than half of the $4.2 per mBtu price of gas from the KG-D6 field of Reliance Industries Ltd. (RIL).

The Petroleum Ministry has already circulated a Cabinet note for hiking the price of gas under the administered pricing mechanism (APM) to Rs.4,142 per thousand cubic metres ($2.32 per mBtu). The price of gas under APM is proposed to be raised in stages to Rs.7,500 per thousand cubic metres or $4.2 per mBtu by 2013. Mr. Sundareshan said the government was weighing policy options to end differential pricing of natural gas that ranges from under $1 per mBtu (APM gas) to $5.73 per mBtu (for gas produced by BG Group-operated Panna/Mukta and Tapti fields).

“Over the next few months we will explore further how to make all parts of the country get gas at almost the same price,'' Mr. Sundareshan said amid indications that the price of gas from different sources might be pooled or averaged out to make it uniform for the consumers. Under pooling of prices, the producers would get the price as per the production sharing contract between them and the government. But the consumer prices would be uniform irrespective of the source of gas.

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