Double the price of gas, says Oil Ministry
The company, which had previously stated that USD 4.2 was too low for monetising smaller and marginal gas finds in KG-D6 and other blocks, said the Rangarajan panel recommendation "indicates positive sign for monetisation of marginal fields".
The Rangarajan Committee suggested averaging volume-weighted price of gas at US's Henry Hub, UK's NBP and Japan Customs Cleared prices for the trailing 12 months with the the net price that producer got from exporting liquefied natural gas (LNG) to India on a long-term contract.
Previously, RIL had from April 2014 wanted to price KG-D6 gas at the rate India pays for importing gas in its liquid form (called LNG) on a long-term contract from Qatar. India pays 12.67 per cent of the international oil rate plus USD 0.26 per mmBtu to Qatar. At USD 100 per barrel oil rate, this translated into a gas price of USD 12.93.
The panel headed by C Rangarajan -- Chairman, Economic Advisory Council to the Prime Minister -- also suggested gas-on-gas competition after five years and sweeping change in future exploration contracts.
The existing PSC allows a company to recover its cost, before giving the government a share in revenue earned from sale of oil and gas.
Stating that cost recovery is at the root of the problems being experienced currently, the panel proposed to dispense
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