The government for the next six months starting October one Natural gasNo. Price 25 per cent to 1. 1.79 per 1 million British thermal units. Based on the nominations of public sector oil and gas producer ONGC and Oil India, the price of natural gas emitted from the allotted areas will now be 1. 1.79 per MBTU for the next six months from October 1. At the same time, the price of offshore gas has been reduced from 5. 5.61 to 4. 4.06 per mmbtu, a government order said.
Prices are determined every 6 months
Natural gas prices are fixed every 6 months. New natural gas prices take effect from April 1 and October 1 each year. These prices are determined on the basis of surplus countries such as the United States, Canada and Russia. The rates applicable from October 1 will be the same as the first payment before May 2020 in ONGC and Oil India Limited. This formula based pricing system was introduced before May 2020.
Where will the impact of the fall in prices occur
The fall in natural gas prices means that the losses of ONGC, the country’s largest oil and gas producer, will increase. However, one of the benefits would be that the cost of electricity generation would be reduced. CNG and PNG prices may also come down.
May increase in the current financial year. Loss of ONGC segment
According to ONGC sources, the company has incurred a loss of Rs 4,272 crore in the gas business in the financial year 2017-18. While it is possible that in the current nominal year (April 2020 to March 2021) it may increase to Rs 6000 crore. The government introduced the new gas pricing formula in November 2014. Which is based on the pricing of gas surplus countries such as the US, Canada and Russia. Shortly afterwards, ONGC lost 65 million standard cubic meters of gas per day to domestic fields.
The oil business cannot be compensated this year
Last year, the oil business offset losses in the gas segment. But the big drop in benchmark prices this year has already put pressure on the oil business. It is difficult for the company to cover the operating costs.