DNA: Need for India to Benchmark Gas Price to Deficit Nations

India should benchmark its natural gas prices to similar gas-deficient nations instead of using rates prevalent in gas-surplus geographies like the US and Canada, says Standard & Poor's Ratings Services.

Using rates in gas-surplus nations, domestic natural gas prices earlier this week were cut by 18% to $4.24 per million British thermal unit, a rate which S&P said will "discourage oil exploration and production (E&P) companies from committing new capital expenditure (capex)".

"The formula for pricing domestic gas considers prices in gas-surplus geographies such as the US and Canada, which have developed gas transportation infrastructure. MORE