Domestic Natural Gas price hiked marginally

Domestic Natural Gas price hiked marginally

First consignment of Long Term LNG contract from US to reach India on Good Friday

The government has hiked the price at which domestic producers in the country are allowed to sell natural gas to $ 3.06 per million British thermal (mBtu) units from $ 2.89 per mBtu.

The price ceiling for gas produced from Deepwater, Ultra Deepwater and High Pressure – High temperature areas has also been revised to $ 6.78 per mBtu from $ 6.30 per mBtu. A statement from the Petroleum Planning and Analysis Cell said that the revised prices are applicable for the April – September 2018 period.


The marginally higher prices will aid domestic gas producers, namely public sector undertaking, Oil and Natural Gas Corporation and Oil India. Private players such as Reliance Industries Limited also stand to benefit.

Industry watchers however maintain that the current prices are not remunerative enough to appropriately incentivise natural gas exploration in the country.

This has pushed consumers towards more expensive import options such as Liquefied Natural Gas (LNG) and the first delivery of a long term, LNG supply contract from the US will be arriving to India on coming Friday.

Speaking to reporters after a meeting with Texas Governor, Greg Abbott, and Minister for Petroleum and Natural Gas, Dharmendra Pradhan said, “India’s oil and gas companies have invested over $ 5 billion in hydrocarbon assets in the US, and have also contracted 9 million tonne of LNG on a long term basis. A new chapter was added in last October, when the first consignment of crude from the US reached Indian shores. On March 30, the first long term LNG consignment from the US will reach Dabhol.”

Growing demand

Pradhan said that India is ramping up gas consumption infrastructure, and the country will be considering further options to meet the growing demand. He said, “After the next round of bids for gas contracts are opened, half of the country will be connected by a city gas grid. Currently there are 92 City Gas Distribution (CGD) contracted areas in India that cover 150 districts. Another 200 districts will be added to this in 2018 alone that will cover 100 CGD areas; this is an indicator of an upcoming gas market in India.”

“Today fertilizer is the primary consumer, power sector is the second consumer, I can visualise a big new consumer in the form of the steel sector in the Eastern part of India,” he added.

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