In a complete turn of events, the petroleum ministry said on Thursday that it was not considering raising price of gas produced from fields operated by state-run firms.
?No this is not under consideration,? is what the petroleum secretary R S Pandey had to say when asked if administered price of gas produced by Oil and Natural Gas Corp (ONGC) and Oil India Ltd from fields given to them on nomination basis were being revised.
The oil ministry in 2007 had moved a Cabinet note proposing rise in the price of natural gas produced by ONGC from fields given to it on nomination basis, to Rs 3.71 per cubic metre from the current Rs 3.2 per cubic metre. For OIL, the gas price has been proposed at Rs 4.15 per cubic metre. The matter has been pending for long and Pandey did not say if the Cabinet note has been withdrawn. He said the price of gas should be competitive and based on content of energy and its environmental impact, if any. But in the same breath stated that India being deficit in natural resources was a sellers? market and competitive pricing should not be attempted till supplies are increased to match demand.
ONGC chairman and managing director R S Sharma has been seeking an immediate hike in price of gas it sells under regulated regime as it was incurring Rs 700 crore loss per year on the business. The price received by ONGC was highly unremunerative, he has been saying. The prices of natural gas in India were much lower than international prices and cost plus mechanism deters investment and competitiveness.
Pandey said gas in India is currently sold in the range of $.11 per million British thermal unit (APM gas price) and $2 per mmBtu (price of LNG imported from spot market). For Reliance Industries? eastern offshore D6 field, the government has fixed $.21 per mmBtu price for five years. This price is pegged at around $5 per barrel crude oil price, while the world-over gas producers are charging 16 % of prevailing oil price for the fuel.
?As long as we are living in (gas) shortages, where is the question of competitive pricing,? Pandey said. Current gas availability (domestic production plus LNG imports) of 110 million standard cubic metre per day met only half of the demand. By 2010, Reliance will produce 89 mmscmd from D6 block. ?By 2011-12, the scenario will change for better,? he said.