Natural gas prices in India are disposed decline 17 percent in April to USD 3.15 every, further straining economics of developing discoveries in deep sea.
As per the new gas pricing formula approved every NDA-government in October 2014, gas prices are subsequent determined on a semi-annual basis and calculated based on a volume weighted average of rates in gas surplus nations of the US, Canada and Russia, based on the twelve-month trailing average price with a lag of three months.
As per the new gas pricing formula approved every NDA-government in October 2014, gas prices are forthcoming determined on a semi-annual basis and calculated based on a volume weighted average of rates in gas surplus nations of the US, Canada and Russia, based on the twelve-month trailing average price with a lag of three months.
Using benchmark prices about of January 1, 2015 to December 31, 2015, gas price by April 2016 to September 2016 is given regard USD 3.15 per million British thermal unit as against USD 3.82 currently, sources said.
On a net-calorific value (CV) basis, the gas price is likely to be USD 3.50 per mmBtu as compared to USD 4.24 currently.
Development of numerous existing discoveries in the blocks operated by state-owned Oil and crude oil Corp (ONGC) again Reliance Industries are dependent on remunerative price.
ONGC Chairman and Managing Director Dinesh K Sarraf last week stated that developing finds in the firm's Krishna Godavari (KG) basin block KG-DWN-98/2 or KG-D5 was economically unviable at current price.
The company has asked the government to raise the rates to make developing the explorations economically viable, he had said.
Goldman Sachs had in a recent report stated that "Indian domestic crude oil prices that are linked to prices in gas surplus economies remain materially below the costs to develop marginal and deep-water fields and hence do not incentive's exploration and production capex." This has procreate Indian producers potentially losing USD 2 billion annually in value added assuming they can replace imports entirely, it added.
"We believe the current gas price regime is not incentive's domestic capex sufficiently as we expect prices under the current formula to decline in 2016-17 while cost for new deep-water discoveries ranges between USD 6 to USD 7 per mmBtu," Goldman had said.
Gas price in India, it said, is subject USD 9 per mmBtu in China, USD 10.5 in the Philippines, USD 6.5 in Indonesia and USD 8 per mmBtu in Thailand and Malaysia. Sources said going by figure trends, gas price may rise marginally to USD 3.32 (on gross calorific value or GCV basis) in second half of 2016-17 fiscal.
They may further yell USD 3.36 per mmBtu and USD 3.42 in the first and second half of 2017-18 fiscal and potential around USD 3.45 in the following fiscal.
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Refereed By - MoneyControl
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