Natural gas price increases by 17% to $2.89; first rise in 3 years
Between November 2014 - September 2017, the domestic natural gas prices have declined by nearly 51%. The ministry will release the new price of this indicator for October 2017 - March 2018 period.
- Domestic Natural Gas prices is kept at $ 2.48 per mmbtu between April 01 - September 2017
- In three years, domestic natural gas prices have declined by 51%
- Domestic Natural Gas prices are revised on six-monthly basis
The Ministry of Petroleum & Natural Gas on Friday increased the domestic natural gas price to $2.89 per mmbtu on gross calorific value (GCV) basis for the period of October 01 - March 31, 2018.
For this period, the natural gas prices have now been increased by 16.53% compared to $2.48 per mmbtu for the period of April 1 - September 30, 2017.
Going ahead, the gas price ceiling for October 2017 - September 2018 period was hiked by 13.30% to $6.30 per mmbtu on GCV basis as against April - September 2017 period.
This ceiling is also for marketing including pricing freedom for gas to be produced from discoveries in Deepwater, Ultra Deepwater and High pressure-high temperature areas.
Domestic natural gas prices are revised on a half yearly basis based on a formula that the government introduced in November 2014.
For the period between April 01 - September 2017, the government had kept the price at $ 2.48 per mmbtu on gross calorific value (GCV) basis.
Analysts expect that for the six month period starting from October 01, 2017, the ministry may increase domestic natural gas price by almost 13% for the first time in three years.
A Bloomberg survey of analysts and industry stated that natural gas prices may be hiked in the range from $2.60 to $3.15.
Natural gas price stood at $5.05 per mmbtu for November 2014 - March 2015 period, came down to $3.06 per mmbtu in April - September 2016 and further to $ 2.48 per mmbtu in April - September 2017 period.
Between November 2014 - September 2017, the domestic natural gas prices have declined by nearly 51%.
To calculate the price of domestic natural gas, the ministry takes into account prices and total annual volume of natural gas consumed in countries like USA, Mexico, Canada, European Union and Russia.
Lower local gas prices comes as a negative for producers like Oil and Natural Gas Corp (ONGC), Reliance Industries, Oil India and Indraprastha Gas as it hampers their profits but benefit gas consuming households, vehicle drivers, and factories.
ONGC, Reliance Industries and Oil India will benefit if prices go up. Gail India -- who transports this gas -- will be among the gainers. Companies in power and fertiliser sectors buying natural gas will be impacted negatively.
— Zee Business (@ZeeBusiness) September 29, 2017
Moreover, companies producing gas from some deep-water fields with high pressure and high temperature areas are allowed a higher tariff of about $5.56 per million British thermal units.
This price is also due to be revised from October 1, 2017.