Steep 26% cut in natural gas prices

New Delhi, March 31

Natural gas prices on Tuesday were cut by a steep 26% to its lowest rate since the pricing was made formula-driven in 2014, a move that is likely to translate into lower CNG and piped cooking gas prices but also make a huge dent in revenues of producers such as ONGC.

Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC) said the bulk of India’s existing gas production will be priced at $2.39 per million British thermal unit for the six-month period beginning April 1, down from $3.23 as of now.

This will be the second reduction in six months to the lowest since 2014. The price of gas produced from difficult fields such as deepsea too has been cut to $5.61 from $8.43 per mmBtu now.

Prices of natural gas, which is used to produce fertiliser and generate electricity and is also converted into CNG for use in automobiles as fuel and cooking gas for households, are set every six months — on April 1 and October 1 each year.

A formula-based pricing came into existence in November 2014 when the Modi government decided to use prevailing prices in gas surplus countries to fix rates for the fuel produced in the world’s fourth-largest importing nation.

The rates, besides dictating the price of urea, electricity and CNG, also decide the revenue of gas producers such as Oil and Natural Gas Corp (ONGC).

Natural gas price was last cut by 12.5% on October 1. Rates were cut to $3.23 per mmBtu from $3.69 earlier. For difficult fields, the rates were cut from an all-time high of $9.32 per mmBtu to $8.43. — PTI

ONGC revenue to take hit

• The bulk of India’s existing gas production will be priced at $2.39 per million British thermal unit for the six-month period beginning April 1, down from $3.23 as of now
• The price of gas produced from difficult fields such as deepsea too has been cut to $5.61 from $8.43 per mmBtu now
• The price cut will make a huge dent in revenues of producers such as ONGC

.