Indian domestic gas price hike to be "substantial": ICRA

The rise in gas prices in the Indian domestic market is expected to be substantial owing to a sharp jump in global benchmarks, Prashant Vasisht, vice president and co-head of corporate ratings at ICRA, tells NGW.

“The rise in gas prices is expected to be substantial. [I] would not be able to give an exact number,” he said.

The price of locally-produced gas is set every six months by the government through a formula linked to global rates. The next price revision will happen at the end of this month. For the October 1, 2021-March 31, 2022 period, the price paid to most domestic natural gas producers is $2.9/mn Btu, up from $1.79/mn Btu during April 1-September 30 period.

High global LNG prices will also impact Indian LNG imports in the January-March quarter. The imports are expected to be about 5.4mn metric tons, Vasisht said. According to the government data, India imported 6mn mt of LNG in the same quarter of the previous year.

In the 12 months to March 31, 2023 (FY2023), LNG import volumes are expected to grow by 5-7% over FY2022, he said. India imported 24.9mn mt of LNG in FY2021, down from 25.6mn mt in FY2020, according to the government data.

Vasisht said that ICRA expects Indian entities to sign more medium and long-term LNG sale and purchase agreements given the high spot prices.

“We expect a lot of companies to sign long-term or medium-term LNG deals. As of now medium-term deals are better as slopes of long-term deals could be elevated due to very high prices,” he said.