BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
On April 06, 2023, the Union Cabinet approved the Kirit Parikh Committee's recommendations for the pricing of natural gas. Going forward, natural gas produced from legacy fields will be priced at 10% of the Indian crude basket's price, subject to dynamic floor and ceiling prices.
The initial floor price has been set at $4/metric million British thermal unit and the initial ceiling price has been set at $6.5/mmBtu. The ceiling and floor prices are set to go up by 0.25/mmBtu per year after two years. In its earlier proposal, the Committee had suggested a fixed floor price of $4/mmBtu, while the initial ceiling price was proposed to be $6.5/mmBtu with an annual hike of $0.5/mmBtu.
The new pricing mechanism will be negative for city gas distributions as it raises the gas cost to $6.5/mmBtu as long as the Indian crude basket is above $65/mmBtu.
In the older administered pricing mechanism pricing regime, we would have expected a sharp correction as U.S. Henry Hub has already come down to ~$2/mmBtu.
The new mechanism is positive for Oil and Natural Gas Corporation Ltd./Oil India Ltd. as the floor price is higher than their cost of production, vis-a-vis selling gas at much lower realisation than the production cost for a long time in the older regime.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
