Govt ropes in Spanish co to study common rates for natural gas

New Delhi, Oct 29 (PTI) Indian government has appointed
Spanish speciality consultancy firm, Mercados Energy Markets
International, to examine possibility of a uniform domestic
price of natural gas, which is now sold at rates ranging from
USD one to USD 5.73 per mmBtu depending on source.
The idea, a brainchild of Petroleum Secretary R S Pandey,
aims to bring about uniformity in rates with a view to put all
customers at par.
"We have selected Mercados EMI from a open tender," said
B C Tripathi, Chairman and Managing Director, GAIL India,
which was appointed the nodal agency for doing the study.
Currently, the government fixes the price of gas produced
from fields given on nomination to state-run ONGC and Oil
India Ltd, while for others pricing is determined in line with
the production sharing contracts. Under consideration is
pooling or averaging out all prices of domestic natural gas
and imported LNG to have a uniform price all over the country.
"The study will consider the feasibility of having a
uniform cost price regime. The report is expected to be
available by the first week of January," Tripathi said.
The gas from fields given to ONGC and OIL on nomination
basis was sold at about USD 1.8 per mmBtu, while in the
north-east it was priced at USD 1 to 1.2 per mmBtu.

Prices range from USD 3.5-5.73 per mmBtu for gas from the
blocks that were awarded before the introduction of New
Exploration and Licensing Policy (NELP) in 1999 and for which
the block operators have signed contract with the government.
For NELP gas, the government has fixed USD 4.205 per mmBtu as
the sale price.
Industry sources said implementing a uniform gas pricing
policy will not be easy as customers who have tied-up cheaper
gas are bound to protest.
Bulk of the highly subsidised gas from ONGC goes to
fertilizer and power plants. Since both are subsidised by the
government, any move to increase the price (as a result of
pooling) may lead to rise in government subsidies, thus may
face opposition, sources said.
Currently, ONGC sells 48.52 million standard cubic meters
per day of gas at USD 1.8 per mmBtu while gas from BG
Group-operated Panna/Mukta and Tapti fields is sold at USD
5.56-5.73 per mmBtu. Cairn India's 9 mmscmd Ravva gas is sold
for USD 3.5-4.3 per mmBtu, while Reliance Industries sells gas
from its KG D-6 fields for USD 4.205 per mmBtu. PTI ANZ