The central government raised the price of domestic natural gas on Saturday to $9.20 per million metric British thermal units for October from $8.60 per mmBtu in September. This is the third consecutive month-on-month hike of domestic natural gas price by the government since it linked the price of natural gas to domestic crude basket.
The gas produced from the nomination fields of Oil and Natural Gas Corp. and Oil India Ltd. will have a ceiling of $6.50/mmBtu, according to a notification by the Petroleum Planning and Analysis Cell.
The price hike may have an impact on the pricing of transport fuel such as compressed natural gas (CNG), and the piped natural gas (PNG) used by residential consumers, as the city gas distributors may pass on the higher fuel cost to the consumers.
The price of natural gas produced from new fields, deep water, and high-pressure-high-temperature (HPHT) fields have, however, been cut to $9.96 per mmBtu for the six month period from October 1 to March 31, 2024 from $12.12 per mmBtu for the six months to September 30, 2023.
On April 8, the Ministry of Petroleum and Natural Gas linked the price of natural gas produced from legacy nomination fields of ONGC, OIL, and the New Exploration Licencing Policy blocks to the Indian crude basket. The price of natural gas from these fields was fixed at 10% of the monthly average of the Indian crude basket.
Earlier, the gas prices were reviewed every six months under the New Domestic Natural Gas Pricing Guidelines, 2014, which were based on volume-weighted prices prevailing at four global gas trading hubs.
These guidelines have now been rationalised due to the significant time lag and high volatility in gas prices. Gas produced by ONGC and OIL from their nomination blocks will be within the floor and ceiling price, and gas produced from new wells or well interventions in the nomination fields of ONGC and OIL will be allowed a premium of 20% over the price under the administered price mechanism.
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