New Delhi: The government has increased the price of natural gas to $8.60 per metric million British thermal unit (mmBtu) for September, from $7.85 in August.
However, the price of the gas from the nominated gas fields of ONGC and Oil India has been kept unchanged at the price cap of $6.5 per mmBtu.
“The price of domestic natural gas for the 1st September 2023 to 30th September 2023 is notified as $8.60/MMBTU on gross calorific value (GCV) basis,” said the notification dated 31 August.
The price of domestic natural gas have been linked to the India crude oil basket since April and is changed every month.
The increase has come in the backdrop of the rise in global crude oil prices on supply concerns. Currently, the November contract of Brent is trading at $87.06 per barrel, higher by 0.26% from its previous close.
In April, the cabinet committee on economic affairs (CCEA) had approved the new gas pricing guidelines, paving the way for linking domestic natural gas prices in India to global crude prices. Under the approved guidelines, the price of natural gas is calculated at 10% of the monthly average of the Indian crude basket, a weighted average of Dubai and Oman (sour) and Brent Crude (sweet) oil prices.
The Cabinet also approved a floor price of $4 per mmBtu and a ceiling of $6.50 per mmBtu under the Administered Price Mechanism (APM) gas pricing.
According to the government, the new pricing policy is aimed at expanding the consumption of natural gas and achieving the government’s target to increase the share of natural gas in the primary energy mix in India from the current 6.5% to 15% by 2030.
The new pricing policy came in the backdrop of high international gas prices. Previously, domestic gas prices were determined based on the domestic gas pricing guidelines approved by the government in 2014. The 2014 pricing guidelines provided for the setting of domestic gas prices for a six-month period based on the volume-weighted prices prevailing at four gas trading hubs – Henry Hub, Albena, National Balancing Point (UK), and Russia for a period of 12 months and a time lag of a quarter.
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Updated: 01 Sep 2023, 12:17 PM IST