Domestic natural gas output rises 19% in August

By: |
September 15, 2021 3:00 AM

The output had fallen 8.1% y-o-y to 28,670.6 mscm in FY21. The production also commenced on August 31 from state-run Oil and Natural Gas Corporation’s (ONGC) U1B deep-water gas located in KG-DWN 98/2 block, which has an estimated peak production of 1.2 million standard cubic meters per day (mscmd).

The 2.5 million tonne (MT) of crude oil produced in the country during the month was 2.1% lower than the production in the year-ago period. Around 85% of the country’s crude oil requirement has to be imported.The 2.5 million tonne (MT) of crude oil produced in the country during the month was 2.1% lower than the production in the year-ago period. Around 85% of the country’s crude oil requirement has to be imported.

The production of domestic natural gas increased 19.2% to 2,898 million standard cubic metre (mscm) in August on a year-on-year (y-o-y) basis, mainly due to higher production from Reliance Industries and BP’s ultra-deep-water field in the KG-D6 Block of the Krishna Godavari basin on the east coast.

The output had fallen 8.1% y-o-y to 28,670.6 mscm in FY21. The production also commenced on August 31 from state-run Oil and Natural Gas Corporation’s (ONGC) U1B deep-water gas located in KG-DWN 98/2 block, which has an estimated peak production of 1.2 million standard cubic meters per day (mscmd).

Demand for natural gas in the domestic market is traditionally dependent on the fertiliser, power, city gas distribution (CGD) entities, refineries and petrochemicals industries. Indigenous natural gas production caters to about 51% of the country’s requirements. Analysts at CRISIL said on Tuesday that given the record-high rates of petrol and diesel, the sales volume of city gas – comprising compressed natural gas (CNG) used by vehicles, and piped natural gas (PNG) used by homes and industries – is set to soar 25-27% in FY22.

The current price for gas produced from local nominated fields has been revised to an all-time low of $1.79/ million British thermal units (mBtu) by the government, which is much below the breakeven point for most fields, deterring gas producers from aggressively increasing production or getting into new high-risk projects.

On the back of rising global crude oil and natural gas rates, analysts expect the price of domestic gas to increase to $3.15/ mBtu for the October-March period. For ultra-deep-water gas fields like the Krishna Godavari basin, which have higher pricing and marketing freedom, the current price cap is set at $3.62/mBtu.

The 2.5 million tonne (MT) of crude oil produced in the country during the month was 2.1% lower than the production in the year-ago period. Around 85% of the country’s crude oil requirement has to be imported.

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