Plan panel to set up a body for uniform gas price:oil ministry

Plan panel to set up a body for uniform gas price:oil ministry

New Delhi: In an effort to make prices uniform for consumers, the oil ministry has asked Plan panel to set up a committee to suggest a mechanism for averaging out price of costlier imported LNG with cheaper domestic gas.

“We have suggested to the Planning Commission that a committee be formed on ‘Pooled Pricing´ of gas," oil secretary s sundareshan said at a FICCI conference in New Delhi.

He said the panel may be headed by advisor (Energy), planning commission and may include chairman, Gail (India) Ltd; managing director and CEO, Petronet LNG Ltd; secretary, Petroleum and Natural Gas Regulatory Board and Director Finance, Oil and Natural Gas Corp (ONGC).

A pooled price or averaging out of difference rates, for natural gas may be necessary in view of the limited domestic gas availability and increasing reliance on imported liquefied natural gas (LNG) to feed the demand.

The oil ministry had earlier commissioned a study by Spanish consultant Mercados International on the feasibility of pooling of over a dozen different rates at which natural gas produced from different fields in the country is sold.

The price for domestic natural gas ranges from $2.71 to $5.73 per million British thermal unit, while LNG on long term contract is currently imported at $6.92 per mmBtu and from spot market at close to $8.52 per mmBtu.

Mercados has suggested separate pools for fertiliser and power sector and involved several complex inter-ministerial issues.

Sundareshan said Planning Commission has been requesting an Inter-Ministerial Committee under the chairmanship of its Advisor (Energy), to formulate a policy for pooling of natural gas prices and devise pool operating guidelines to make the policy operational.

Others in the committee could be representatives of the ministry of petroleum and natural gas, power, fertiliser and finance at the level of the additional secretary.

The need for pooling of domestic gas price with imported LNG has arisen because LNG from Australia will cost almost $14 per mmBtu when it lands at Kochi in Kerala in 2014.

“It will be unreasonable to expect consumers to pay (such a price)," Sundareshan said.

Petronet LNG Ltd, India’s largest importer of liquefied natural gas, has contracted 1.5 million tons a year of LNG from Australia for delivery at its under-construction Kochi terminal in Kerala from end 2014.

The natural gas produced by state-owned ONGC and Reliance Industries, which together account for over 80% of gas in the country, is priced at $4.2 per mmBtu.

The modalities of pooling will be worked out in 6-8 months, he said.