The Hindu Business Line : ‘No immediate plan to raise gas prices’

New Delhi, Sept 26 While industrial and domestic consumers will continue to benefit from the administered price of gas, producers such as ONGC and Oil India Ltd (OIL) will continue to bear the burden of selling at these prices.

The Petroleum Secretary, Mr R.S. Pandey, said there was no immediate plan to raise the price of gas sold under the APM (administered price mechanism) regime.

Speaking to newspersons on the sidelines of the Seventh Petro India 2008 conference on ‘Gas in India — Issues, Opportunities and Challenges’, he said product scarcity has tilted the current gas market towards the suppliers. “There is no immediate plan to increase prices. We cannot move towards competitive pricing unless supplies are augmented. As long as we are living in gas shortages, where is the question of competitive pricing,” Mr Pandey said.

Short supply

Public sector exploration and production companies — ONGC and OIL — sell gas produced from fields given to them on nomination basis at a controlled price. There has been considerable debate on raising the price of such gas produced by ONGC to Rs 3.71 a cubic metre from the current Rs 3.2 a cubic metre. For OIL, the proposed price is Rs 4.15 a cubic metre.

The Petroleum Secretary categorically said the gas price should be competitive and based on content of energy and its environmental impact, if any. He also said that India being deficit in natural resources was a sellers’ market and competitive pricing should not be attempted until supplies are increased to match demand. He said gas in India is currently sold in the range of $2.11 per million British thermal unit to $22 per mmBtu. The well head gas price for Reliance Industries Ltd’s KG field has been fixed at $4.21 per mmBtu for five years.

Current gas availability — indigenous production plus LNG imports — of 110 million standard cubic metres a day met only half the demand. By 2010, Reliance will produce 89 mmscmd from the D6 block. “By 2011-12, the scenario will change for the better,” he said.

ONGC losses

The ONGC Chairman and Managing Director, Mr R.S. Sharma said there is need to increase the APM gas price as the company incurs a monthly loss of Rs 100 crore. However, if return on capital and non-recovery of cost are also included, the company loses about Rs 200 crore a month. The company has been seeking a minimum $4 per mmBtu for the gas.

Separately, the Director General, Directorate General of Hydrocarbons, Mr V.K. Sibal said the Government may come out with the next round of bidding for oil and gas exploration blocks by January. The next round of auction for coal bed methane blocks is expected by December.

“We are in the midst of preparations for the next round of NELP and it may most likely happen in December-January,” he said. The blocks on offer in NELP VII will be awarded in the next few days.

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