New Delhi: The government has reduced the price of natural gas produced within the country from USD 8.47/mmBtu in December 2023 to USD 7.82/mmBtu in January, marking a significant cut of 7.67 percent. Notifying the price on December 31, 2023, the Petroleum Planning & Analysis Cell (PPAC) said, “In accordance with MoPNG’s Notification No L-12015/1/2022-GP-II dated 7th April, 2023, the price of domestic natural gas for the period 1st January, 2024 to 31st January, 2024 is notified as US$ 7.82/MMBTU on Gross Calorific Value (GCV) basis.” According to the new gas pricing formula which took effect in April 2023, this price is 10 percent of the Indian Crude Basket Price and is announced by PPAC every month. The price applies to fields under Production Sharing Contract (PSC) regime which provide for government’s approval of prices.
The gas produced from legacy fields in the nomination blocks of state-run Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), which is covered under Administered Price Mechanism (APM), will continue to have a ceiling price of USD 6.5/mmBtu, said PPAC. According to the new gas pricing formula, the APM gas price has been fixed at USD 6.5/mmBtu for two years after which it will be increased by USD 0.25/mmBtu every year.
Since the City Gas Distribution (CGD) sector gets top priority in natural gas procurement, it procures most of its requirement from legacy fields of nominated blocks. The cut in the price is likely to benefit sectors like fertilizer and gas-based power plants.