The government on Wednesday said that natural gas price cannot be raised overnight and that any revision has to be in line with the paying capacity of user industries like power and fertilisers.
Now domestic natural gas is priced in the range of $4.2-$5.65 per million metric standard cubic metres a day (mmscmd) compared to the import price of $14-15 per unit, making domestic producers ask for a better price as an incentive for further investments. Reliance Industries, for example, gets only $4.2 per unit for the gas it produces from the D6 field in the Krishna Godavari basin.
Speaking at a seminar on energy security organised by industry chamber Ficci, petroleum secretary G C Chaturvedi said that gas price revision has to be in sync with the full deregulation of the fertiliser sector and linking power tariffs to market forces.
?We can revise gas price, but it has to be gradual so that the impact on user industries is not sudden and jerky. Those sectors, such as fertilizers, are also trying to bring price reforms although its pace is slow. So our change (in pricing) has also to be gradual,? Chaturvedi said. ?When you try to sell power at slightly higher price, states do not buy. Instead, they go for power cuts,? the secretary said. The move towards more remunerative pricing of gas should not bring the user industries to a grinding halt, he said.
He said the government is planning to have a strategic oil reserve of 18 million tonnes or 132 million barrels by 2020, up from a 5.33 million storage facility that is under under construction now. State-owned Strategic Petroleum Reserves is building the storage tanks in Visakhapatnam, Mangalore and Padur. When there is a physical shortage of oil, these will be useful. But when governments use their strategic oil reserve to ease their import bill in times of high price, global producers tend to cut down their output to manage the demand supply situation and protect their revenues.
Chaturvedi said India will need Rs 18,000 crore to fill the current crude reserves that are under construction. India relies on imports for about 80% of its crude oil requirement. The country may let foreign oil companies to utilize the reserve, for which many have already shown interest.
India’s plans to auction shale gas blocks would, however, become a reality only by end of 2013 as the government and the oil regulator, the DGH, are now busy preparing a policy framework taking inputs from US’ wealth of experience in the sector.