Commodities

Natural gas price cut by 26% to $2.39 per mBtu

Our Bureau New Delhi | Updated on March 31, 2020 Published on March 31, 2020

The price of domestically produced natural gas was cut by 26 per cent to $2.39 per million British thermal units (mBtu) for the April to September 2020 period.

This is down from the $3.23 a mBtu sale price allowed for locally produced gas in the country during October 2019 to March 2020 period.

The new price is the lowest gas price since 2014, when the Ministry of Petroleum and Natural Gas linked domestic prices to the modified Rangarajan formula.

According to the formula, the domestic gas price is based on the weighted average price of four global benchmarks — the US-based Henry Hub, Canada-based Alberta gas, the UK-based NBP, and Russian gas.

Lower gas price would mean lesser input costs for compressed and piped natural gas players like Indraprastha Gas Ltd. It would also benefit fertilizer and gas-based power generation companies. But it will translate to more pressure on the already stressed margins of gas producers such as ONGC and Oil India.

The ceiling price for gas produced from difficult fields was fixed at $5.61 per mBtu for the same six-month period. This is down by about 33.5 per cent from the price allowed in the preceding period.

Published on March 31, 2020

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