ONGC is losing around Rs 6,000 -7,000 crore every year on its natural gas business as the price of the gas produced under the administered price mechanism (APM) remains well below the cost of production for the company, according to a senior official of the state-run oil marketing company.
Over 95 per cent of ONGC’s production of 60-65 MMSCMD is priced under the government’s APM. The central government recently lowered the price of natural gas under the APM to $1.79 per mmBtu from $2.39 mmBtu for six months starting October 1.
“Rs, 6,000-7,000 crore is the loss from the gas business per se” said Subash Kumar, director (finance) of ONGC.
Shashi Shanker, Chairman and Managing Director, ONGC, said that the Japan/Korea marker for natural gas could be one of the benchmarks used to review the formula for arriving at the price of natural gas.
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