Reliance Industries: The price of natural gas produced from difficult fields like KG-D6 of Reliance Industries can be reduced by about 14 percent from next month. Natural gas prices are expected to decline amid reduction in global fuel prices. Sources said the price of gas produced from deep sea fields and high pressure and high temperature (HPTP) can be reduced to $ 10.4 per million British thermal units (BTH) for a period of six months starting from October 1. It is currently $12.12 per unit.
Gas prices are decided twice a year
The government decides the price of natural gas produced in the country twice a year. Natural gas is converted into CNG and PNG. CNG is used as vehicle fuel, while PNG is used for cooking in homes. Apart from this, it is also used in electricity and fertilizer production. The rates are determined every year on 1st April and 1st October.
There are two formulas to decide the price of gas. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. These formulas are used for gas produced from OIL and gas produced from new fields located in difficult areas like deep sea.
The formula related to old areas was changed in April
In April this year, the formula related to old areas was changed. Under this, it was standardized at 10 percent of the current Brent crude oil price. However, the rate was capped at $6.5 per unit. Rates for old areas are now decided on a monthly basis. The price for the month of September became 8.60 US dollars per unit, but due to the fixed limit, producers will get only 6.5 US dollars.
The average price of Brent crude oil this month is around $ 94 per barrel. But with the limit fixed, the rate will remain at $6.5. Sources said that the old formula is being used for the price of gas produced from difficult fields. Under this, a one-year average of international LNG prices and rates at some global gas centers are taken with a lag of one quarter. He said that there was a decline in international prices in the reference period from July 2022 to June 2023. That is why prices for gas produced from difficult areas will be lower.
Gas prices had increased earlier
For a period of one month starting April 1, the price of gas produced from difficult fields was reduced to US $ 12.12 per unit, which was earlier a record of $ 12.46. In the past, due to increase in gas prices, the rates of CNG and cooking gas (PNG) reaching homes through pipes had increased by 70 percent.
Fuel became expensive in global markets due to Russia-Ukraine war
Due to the Russia-Ukraine war, fuel prices had strengthened in the global markets. Due to this, the price of gas produced from old fields in the country also increased to a record $8.57 between October 2022 and March 2023. At the same time, the price of gas produced from difficult areas became $12.46. Based on the old formula, the price of gas produced from old fields was to be increased to $ 10.7 per unit from April 1, but to keep the prices under control, the government changed the formula and fixed a limit on the price.
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