The recent price hike of natural gas by the Centre may result in an additional revenue of Rs.1500 crore to the state-owned ONGC Limited during the first half of the current fiscal, said global rating and research agency Moody’s.
The price paid to most of natural gas produced from domestic fields will be $3.06 per million British thermal unit (mmBtu) for six months, beginning April 1, from current USD 2.89, according to a recent notification issued by oil ministry’s Petroleum Planning and Analysis Cell.
“Natural gas contributed around 45% of ONCG’s total crude oil and natural gas production volume in fiscal 2017.”
“Assuming natural gas sales volume of around 10 billion cubic meters for the first six months of fiscal 2019 for ONGC and its joint venture partners, ONGC’s natural gas revenue will increase 23% to Rs.80 billion (Rs.8000 crore) for the six months between 1 April and 30 September 2018, from a reported Rs.65 billion (Rs.500 crore) the year before”, Moody’s said in its credit outlook issued today.
The government revises domestic natural gas prices every six months using a pricing formula based on a volume-weighted annual average of prices prevailing in Henry Hub (US), National Balancing Point (UK excluding Russia), Alberta (Canada) and Russia, it added.
India’s oil and gas producers, including ONGC, are unlikely to increase gas production over the next 12-18 months because most of the discovered resources will take at least another two to three years to be operable, the report opined.
ONGC, accounted for 70% of the country’s natural gas production on a standalone basis for fiscal 2017.
“We expect India’s LNG imports to increase because domestic production growth will lag the growth in domestic demand for LNG. India’s oil and gas producers, including ONGC, are unlikely to increase gas production over the next 12-18 months because most of the discovered resources will take at least another two to three years to reach production,” the report said.
India relies on LNG imports to meet its energy needs, with LNG imports accounting for 44.5% of total natural gas consumption in India in fiscal 2017, it said.
The price ceiling for natural gas produced from deep-water blocks was also hiked to $6.78 per mmBtu from U$6.30 per mmBtu.
