Gas Prices in India Are "Artificially Depressed"

BP on Monday said that current gas prices in India are "artificially depressed" that do not encourage investments.

Gas "prices (in India) are artificially depressed... Prices should be left to forces of demand and supply instead of leaving them to administrator," BP's chief economist Christof Ruehl told reporters in New Delhi, IANS new agency said.

RIL-BP currently sell natural gas produced from Krishna Godavari basin deepsea fields at $4.205 per million British thermal unit, a rate fixed by the government for first five years of production that began in April 2009.

The two firms, however, feel the rates are lower than market price and are seeking rates equivalent to the rate at which the country imports gas in its liquid form (Liquefied Natural Gas) from Qatar on a long-term contract.

At $100 per barrel oil price, the KG-D6 gas, according to the formula proposed by RIL-BP, will cost $12.93 per mmBtu.

"In India, prices are not remunerative enough for (putting) more investment," Ruehl said, adding when prices are kept artificially low, it "depressed domestic production".