Reliance-BP’s natural gas production to raise domestic consumption and cut expensive imports, say analysts
Natural gas from Reliance-BP’s new field in the KG basin will help raise domestic consumption and cut expensive imports, analysts and industry executives said. RIL-BP’s production has started at a time the liquefied natural gas (LNG) prices in the international spot markets are roaring. Spot LNG rates in Asia have jumped to above $11 per unit this month, a six-year-high, from a record low of under $2 per unit in May on colder-than-normal winters in north Asia, higher freight, and supply outage at some LNG exporting plants. Most of the gas currently being produced by RIL-BP’s new field was sold last year at a price linked to crude oil and can’t rise above the government-set ceiling of $4.06 per unit until March. “There is a lot of latent domestic demand. The new volume from RIL-BP will help domestic consumption to rise,” said K Ravichandran, senior vice president & group head-corporate ratings at rating agency ICRA. “There will be a small impact on import as well where consumers will want to cut down on expensive spot purchases.”
