The Union Cabinet on Thursday approved a new price formula for their undeveloped gas discoveries in difficult areas, which will lead to a near-doubling of rates.
- Domestically produced gas costs at average of rates in US, Russia and Canada
- Deep sea discoveries which are unexplored will be given the cost of alternative fuels
- The price will be the lowest of weighted average of fuel oil and imported LNG or weighted average of fuel oil, naphtha and imported coal
- The price of gas will come to USD 7 per million British thermal unit (mmBtu)
- Gas price in India is currently at USD 3.82 per mmBtu, which will fall to USD 3.15 in April
- The new price will apply to undeveloped gas discoveries and not on currently producing fields
- The new pricing would help in production of 35 million standard cubic metres a day of natural gas production for the next 15 years translating to around 7 trillion cubic feet of natural gas.
- It would help unlock Rs 8 lakh crore of investments
- The weighted average of the alternate fuels will be over one year and the the price cap will be revised every six months
Points to note
- Union Oil Minister- Dharmendra Pradhan
- Major Oil firms- ONGC and Reliance