Oil ministry raises price of natural gas by 17%

New Delhi: The oil ministry on Friday effected a 17% rise in the price of natural gas to $2.89 per million British thermal unit (mmBtu) for the six months starting 1 October, in line with the global price to which the local price of gas is benchmarked.

This price is applicable for gas from blocks that were auctioned after 1999.

The ministry also raised the price of gas from discoveries in deep water, ultra-deep water, high pressure and high temperature blocks by over 13% to $6.3 per mmBtu for the period 1 October 2017 to 31 March 2018, said an official statement from the Petroleum Planning and Analysis Cell, part of the ministry.

A higher price is allowed for gas produced from difficult-to-reach areas in order to make investments in those blocks viable at a time when the global price of gas, which tracks the price of crude oil, is subdued.

The price is applicable on a gross calorific value basis, said the statement. The increase in prices will push the price of compressed natural gas (CNG) and piped natural gas (PNG) sold by GAIL (India) Ltd’s units.

Domestic gas price is reset every six months, taking into account the average price of four global benchmarks—the US-based Henry Hub, Canada-based Alberta Gas, the UK-based NBP, and Russian gas—as per a formula approved by the government in October 2014.