The Ministry of Petroleum & Natural Gas (MoPNG) is likely to move the Union Cabinet this month for approval on the recommendations of the Kirit Parikh committee.

The committee on suggesting fair price of natural gas to the end-consumer has suggested pricing freedom for companies on gas produced from legacy fields or APM gas from January 1, 2027 and for gas produced from challenging fields from January 1, 2026.

“The Ministry has just received the report and is going through it. We will firm up our views on the report and send the first set of approvals to the cabinet this month. In case, there is a delay due to the Winter Session of Parliament, then it will be done in January 2023. We will also go for inter-ministerial consultations on the report,” a top government official said.

The panel suggested a floor price of $4 per million British thermal units (mBtu) and a ceiling price of $6.5 per mBtu for gas produced under the administered price mechanism (APM). At present, this price is $8.57 per mBtu till March 2023. It recommended not tinkering with natural gas prices from Deepwater, Ultra Deepwater and High Pressure-High Temperature (HPHT) fields such as in KGD6 run by Reliance Industries and BP, which at present is $12.46 per mBtu.

Gazprom issue

The official said that India is speaking with Germany, Russia and Gazprom on solving the liquefied natural gas (LNG) supply issue between state-run GAIL and a former unit of Gazprom. The supplies have been disrupted since May this year.

“One solution is going to courts, where we will have to prove whether it is a wilful default, while the other party will say its force majeure. But we have a time tested relationship with Russia and this is not a good solution. It is a 22-year contract and we have to do business together. We are exploring avenues to settle this. Talks are on with Germans, Russian and Gazprom,” the official explained.

In 2012, GAIL inked a 22-year deal with Gazprom to buy 2.85 million tonnes (mt) of LNG. The supplies commenced six years later and were to reach full volume in 2023.

Gazprom Marketing and Trading Singapore (GMTS) had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania and in early April, Gazprom gave up the ownership of the German unit. Subsequently, the former Gazprom unit defaulted on LNG supplies to India.