Deccan Herald: India's Gas Deficit to Continue on Unimpressive New Policy

India's natural gas deficit and its reliance on imports will continue as the just announced gas pricing policy with its low rates and lack of roadmap to free pricing may not revitalise near stagnant exploration and production, a research report said today.

Existing gas discoveries in deepsea areas of Bay of Bengal are not viable at the new gas price of USD 5.61 per million British thermal unit, which is just 33 per cent higher than old rate of USD 4.2, it added.

"The new gas pricing policy is unlikely to revitalise Indian exploration and production (E&P)," Kuala Lumpur-based CIMB Group said in its report on India's oil and gas scenario.

Besides raising price of gas from existing fields, the government had also on October 18 announced that a yet-to-be- determined premium will be paid for new discoveries in deepwater and difficult projects.

"The exclusion of existing deepwater fields from premium pricing may hamper the production prospects of some key Krishna Godavari basin blocks.

"The lack of a roadmap to free gas pricing, possibility of internal rate of return (IRR)-based application of pricing premium and Government of India's differentiation between reasonable and windfall profits (perhaps erroneous) may fail to boost exploration," it said. MORE