In a step in direction of India’s aim of reaching a gas-based financial system, the NITI Aayog has lined up a proposal to provide full advertising and marketing and pricing freedom to all natural gas produced in the nation, together with nominated gas fields.
The planning physique is batting for promoting all natural gas by means of the Indian Gas Exchange (IGX), the nation’s first natural gas alternate, the place the customer and vendor can determine on costs in a clear method, mentioned sources conscious of the event.
The transfer, if it will get cleared by the federal government, will probably be advantageous to firms like Oil and Natural Gas Corporation (ONGC) and Oil India (OIL), sitting on a majority of nominated fields.
At current, the notified gas worth of $6.1 per metric million British thermal unit (mmBtu) is up from $2.9 per mmBtu in the course of the October-March interval.
Based on estimates, the break-even worth for the continuing and deliberate initiatives of ONGC are in the vary of $5-9 per mmBtu.
“The move will be helpful to not just ONGC and the nomination fields, but to the entire natural gas segment in the country. When all the natural gas produced in the country is sold on the IGX, it will boost domestic production,” mentioned R S Sharma, former chairman and managing director, ONGC.
IGX was arrange by the Indian Energy Exchange two years in the past.
There are considerations, nonetheless, across the free pricing plans.
“They will impact the subsidy on fertilisers, in turn shooting up if prices are market-driven. The city gas segment, which is getting natural gas based on the Rangarajan formula, may also feel the squeeze. From the oil and gas sector, the big beneficiaries will be ONGC and OIL since most of their production is from the nomination fields,” mentioned Prashant Vasisht, vice-president and co-group head, ICRA.
The Aayog’s plans additionally advocate the creation of a particular goal automobile, with a pool of funds to be created by state-run firms and equal share by the federal government to spice up the exploration sector. This can also embody the engagement of a global companion as an executing company. On profitable exploration, this companion could also be given taking part curiosity in the block. This pooling of funds is to scale back danger by just one firm.
For the upcoming Open Acreage Licensing Policy rounds, the Aayog favoured the creation of a particular cell throughout the Directorate General of Hydrocarbons that might get all clearances in advance from defence, atmosphere, and forest departments, earlier than the blocks are bid out.