ONGC share price surged as much as 3 per cent on Thursday after the government said that it plans to increase natural gas price by about 60 per cent for underdeveloped gas discoveries in difficult areas. Shares of Reliance Industries also gained as much as 1.7 per cent in trade so far.
Domestically-produced gas is currently priced at an average of rates in gas-surplus countries like the US, Canada and Russia, for deep-sea discoveries yet to be developed, the government plans to price them at an average cost of alternative fuels — naphtha and fuel oil as well as imported LNG.
At 12.59 pm, ONGC shares were trading 1.46 per cent up at Rs 197.85. The scrip opened at Rs 196.70 and has touched a high and low of Rs 201 and Rs 194, respectively, in trade so far. Share price of ONGC closed 1.31 per cent up at Rs 197.55.
Reliance Industries (RIL) shares were trading 0.98 per cent up at Rs 1,011. The benchmark BSE Sensex was trading 306 points higher at 24,549 at the same time. Reliance Industries scrip settled 1.13 per cent up at Rs 1012.55.
Gas price in India is currently at $3.82 per million British thermal unit, which will fall to $3.15 in April, a rate not enough to make up for cost of deep-sea development.
Earlier, Goldman Sachs, in a recent report, said the current gas price regime is not incentivising domestic capex sufficiently as cost for new deep-water discoveries ranges between $6-7 per mmBtu.
Gas price in India, it said, is lower than $9 per mmBtu in China, $10.5 in the Philippines, $6.5 in Indonesia and $8 per mmBtu in Thailand and Malaysia.
(With inputs from PTI)