14% cut in RIL’s natural gas price
The price of natural gas produced from difficult areas like KG-D6 of Reliance Industries (RIL) is likely to be cut by about 14 per cent from next month in line with softening energy prices, sources said.
For the six-month period starting October 1, the price of gas from deepsea and high-pressure, high-temperature (HPTP) areas is likely to be cut to around $10.4 per million British thermal unit (mBtu) from the current $12.12, they said. The government bi-annually fixes prices of the locally-produced natural gas, which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers.
Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deepsea. Rates are fixed on April 1 and October 1 each year. In April this year, the formula governing legacy fields was changed and indexed to 10 per cent of the prevailing Brent crude oil price. The rate was however capped at $6.5 per mmBtu. Rates for legacy fields are now decided on a monthly basis. For September, the price came to $8.60 per mmBtu but because of the cap, the producers would get only $6.5. Brent crude oil has averaged around $94 per barrel this month but rates will continue to be capped at $6.5. Sources said the price for difficult area gas continues to be governed by the old formula that takes one-year average of international LNG prices and rates at some global gas hubs with a lag of one quarter. International prices had fallen in the reference period of July 2022 to June 2023 and so it will translate into lower prices for difficult fields, they said.