India Notifies New Gas Price Regime
The Government of India on Friday notified a new natural gas pricing guidelines under the Rangarajan formula that will double the domestic gas price from the present price of $ 4.2 mbtu starting April 1 this year. The decision to hike domestically produced gas was taken early last year.
The ‘Domestic Natural Gas Pricing Guidelines, 2014’ will be applicable to all natural gas produced domestically, irrespective of the source, whether conventional, shale, CBM, etc, the oil ministry said in a statement.
These guidelines shall also be applicable for natural gas produced by ONGC and Oil India from their nominated fields, the statement said.
Reliance Industries (RIL) will get the benefit of the new gas price from its existing fields like MA in the KG D6 block and new/upcoming ones like R-Series and satellite in the KG Basin block and the ones in North East Coast block NEC-25.
However, for Reliance Industries’ D1 and D3 gas discoveries of Block KG-DWN-98/3, these guidelines shall be applicable subject to submission of bank guarantees in the manner to be notified separately, the oil ministry said.
Last month, the government allowed RIL to nearly double the price of natural gas from April provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved.
“The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11,” Press Trust of India said citing sources.
Friday’s statement also said that these guidelines shall not be applicable where prices have been fixed contractually for a certain period of time, till the end of such period and not be applicable where the production sharing contract provides a specific formula for natural gas price indexation / fixation.
Further, the pricing of natural gas from small / isolated fields in the nomination blocks of NOCs will be governed by the extant policy in respect of these blocks issued on 8th July, 2013.
The prices determined under these guidelines shall be applicable to all consuming sectors uniformly.
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