India seen raising natural gas price to highest in two years
The government will raise gas prices to $3.2 per mmBtu for April to September, almost 11% more than the current price of $2.89
Mumbai: India is poised to lift its domestic natural gas price to the highest in at least two years, boosting earnings of producers like Oil and Natural Gas Corp. Ltd (ONGC), according to a survey of analysts and industry participants.
The federal government will increase the price to $3.2 per million British thermal units (mmBtu) for April to September, almost 11% more than the current price of $2.89, according to an average of 10 estimates, compiled by Bloomberg. India sets the rate every six months and an announcement on the price is due next week.
Higher gas prices may encourage producers to boost investment and production, helping the country meet its goals of cutting energy imports and more than doubling the share of gas in the energy mix. The increase will boost the earnings of India’s largest gas producer ONGC and Oil India Ltd., according to Gagan Dixit, an analyst at Elara Securities India Pvt.
“At the current volume of production, every dollar increase in domestic gas prices boosts the annual revenue of ONGC by about 41 billion rupees and post-tax profit by about 27 billion rupees,” Dixit said by phone from Mumbai.
This will be the highest gas price since $3.82 for the six months ended March 2016. In October, India raised the domestic gas price for the first time in nearly three years to $2.89. The forecasts in the latest survey ranged from $3.05 to $3.30 per mmBtu.
ONGC produced about 64 million cubic metres a day of natural gas in the first 10 months of the financial year that began in April, comprising about 72% of India’s total gas output, according to Bloomberg calculations.
ONGC spokesman Pallab Bhattacharya and oil ministry spokesman Prashant Pathrabe didn’t respond to emails seeking comment.
Companies producing gas from some deep-water fields with high pressure and high temperature areas are allowed a higher tariff of about $6.30 per million British thermal units. That price is also due to be revised from 1 April. Bloomberg
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