India Hikes Domestic Gas Price

Indian government on Saturday raised price of domestically produced natural gas to $5.61 mBtu from $4.2, BusinessLine newspaper reported.

The new price, applicable from November 1 will be effective prospectively and revised on a half-yearly basis. However, the price of $5.61 a unit is the well-head price which does not take into account the transmission and marketing costs. Therefore, the end-user will get the natural gas at around $6 a unit or more, the newspaper said.

"Cabinet has approved the reworked formula keeping in consideration that there is sufficient incentive for drilling and exploration while not making it prohibitive for consumers," said Finance Minister, Arun Jaitley at a briefing after the meeting of Cabinet Committee on Economic Affairs.

The new formula was derived from a combination of the C Rangarajan formula, which recommended a $8.4 a unit price for gas, and recommendations of the committee of secretaries, said Jaitley.

However, the price will not be applicable for Reliance Industries's D1 and D3 fields in the Krishna Godavari basin on the east coast of India, as the matter is under arbitration, BusinessLine added. The revised gas price would be applicable to all gas produced from nomination fields given to ONGC and OIL India, NELP blocks, such Pre-NELP blocks where PSC provides for Government approval of gas prices and CBM blocks.

Deepwater and ultra-deep water fields will also get a premium which would be determined at an appropriate time, a statement from the Government said.