The government on Friday hiked the domestic natural gas price by 40 per cent to $8.57 per mBtu on gross calorific value for the second half of FY23, beginning October 1, compared to the April -September 2022 period.

The MOPNG’s Petroleum and Analysis Cell also said the gas price ceiling for extracting the key commodity from challenging fields — deep water, ultra deep water and high pressure-high temperature fields — has also been revised upwards by around 25 per cent to $12.46 per million British thermal units (mBtu). Prices have been raised largely in line with the uptick in international prices.

India meets half its natural gas requirement through domestic production, while the other half is imported as liquified natural gas (LNG).

Previous high

This is the highest price for procuring natural gas in the country since the government introduced the New Domestic Gas Pricing Guidelines in November 2014. The previous high in gas price was recorded in the first half of the current fiscal year at $6.10 per mBtu. Before this, the highest price was reported for the November 2014-March 2015 period at $5.05 per mBTU.

Similarly, the highest ceiling price for gas from challenging fields was during H1 FY23 at $9.92 per mBtu. Prior to H1 and H2 FY23, the highest price reported was during the April 2019-September 2019 period at $9.32 per mBtu.

New variable

On Thursday, businessline had reported that in case the government decides to soften the impact of the record high international prices on the domestic industry, it may introduce a new variable or component to calculate the administered price mechanism (APM) rate, which would then be in the range of $8-8.5 per mBtu.

APM is based on gas prices at Henry Hub (US), Alberta Gas Reference (Canada), NBP (UK) and Russia Gas over a year with a lag of one quarter. Generally, a $1 per mBtu increase in gas price translates to around ₹4-4.5 per kg rise in CNG prices. At present, CNG prices in Delhi are ₹75.61.