ET: Gas Shortage in India During Global Glut

Oversupply has lead to natural gas prices crashing globally even though crude oil prices have moved up. Despite the global glut Indian households have been surprisingly hit by cooking gas shortage due to laxity of our ‘Petroleum Ministry’. Besides though prices fell globally India’s LPG subsidy bill has ballooned during the last year to nearly Rs 23,746 crores 90% of which are passed off as OMC under recoveries. 

A near 50 % drop in production at IOC was reported at Mangalore and Kochi refineries due to lower imports during March.  Why did it happen when gas prices at the Henry Hub in US have crashed to a 10 year below $3 per million metric BTU following a glut in global production while motor propane retail prices slipped to $1.21 per gallon almost 25% lower than Sept 2011 prices in the US. Ironically India was last week offered by Qatar an additional 5 million tonnes of natural gas, but at a prohibitive $15.96 per million metric BTU (indexed at 14.5 % of Brent crude price) that would have lead to tripling of domestic gas prices after shipping, regasifying and taxes. MORE