India increased domestic natural gas prices for the first time in nearly three years, bringing relief to producers who are struggling to recover costs.
The government raised the price of locally-produced gas by 17 percent to $2.89 per million British thermal units for the six months beginning October, it said in a notification. The rate for natural gas is set every six months. This was in line with a Bloomberg survey of eight respondents who expected an increase in the range of $2.60 to $3.15.
Companies producing gas from some deep-water fields with high pressure and high temperature areas are allowed a higher tariff of about $5.56 per million British thermal units. That price has also been revised higher to $6.30 per mmBtu with effect from October 1 for the next six months.
The government last raised gas prices when it introduced a new pricing formula in November 2014. Since then, it has reduced prices by more than half through five successive cuts, according to Bloomberg data. Lower prices have squeezed the margins of explorers such as Oil & Natural Gas Corp. and Reliance Industries Ltd. but have helped the government increase demand for the fuel from fertiliser companies and power generators, and encouraged its use in transport and cooking.
Domestic natural gas producers had been seeking a revision in the formula for fixing gas price, with a fixed floor price for their produce in order to get some relief from selling natural gas at below cost due to the government set prices.
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