Govt notifies new gas pricing formula

The formula will apply to all natural gas produced in India, whether conventional, shale or even CBM.

New Delhi | Published: January 11, 2014 1:53 am

The government on Friday notified a new natural gas pricing formula based on the recommendations of the committee headed by C Rangarajan, chairman, Economic Advisory Council to the Prime Minister.

Natural gas, from April, will be priced at an average cost of liquefied natural gas (LNG) imports into India and benchmark global gas rates, including Henry Hub prices.

This formula will be applicable to all gas produced by both public sector firms like ONGC and private companies like Reliance Industries for five years till March 31, 2019, said a government press note.

Barclays Equity Research estimates the price will be $8.3 per million metric British thermal units (mmBtu) in 2014-15 as against the current rate of 4.2 per mmBtu. This will rise to $ 9.1/mmBtu in the following year and then to $ 9.4/mmBtu in 2016-17. The formula will apply to all natural gas produced in India, whether conventional, shale or even CBM.

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