India Sharply Cuts Price of Locally Produced Gas

India has slashed the regulated wholesale price of locally produced natural gas by around 26% with effect from April 1, Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC) said on March 31 in a statement.

For the April 1-September 30 period, the price paid to most domestic natural gas producers has decreased to $2.39/mn Btu from $3.23/mn Btu during the October 1-March 31 period. The current price is the lowest under the new domestic gas price regime, which was introduced in 2014. The price of locally-produced gas is set every six months and applicable on the basis of gross calorific value.

Also, the ceiling price for gas from difficult fields such as deep water, ultra-deep water and high pressure-high temperature areas was reduced to $5.61/mn Btu from the earlier price of $8.43/mn Btu, PPAC said.

India’s domestic gas production has been stagnant in recent years and low prices have played a big role in that. To meet the demand shortfall, the south Asian nation imports LNG from producers such as Qatar, Russia, Australia and the US. India’s import dependency has consistently remained around 50%.