Highlight
- RIL expects natural gas prices in India to rise again in October
- To align domestic rates, the company wants the government-set limit to be done away with
- Government fixes gas prices every six months based on international rates
Reliance Industries Ltd expects natural gas prices in India to rise again in October but wants to go by government-set caps to align domestic rates with global energy prices. Sanjay Roy, senior vice president of exploration and production, said in an investor call, the group, controlled by billionaire Mukesh Ambani, expects the price range for the sale of KG-D6 gas to exceed the current USD 9.92 per million British thermal unit. Following the announcement of the company’s quarterly earnings on Friday.
After a loss-making provisioning for several quarters, Reliance’s gas exploration business has begun to take advantage of the global jump in energy prices, which has already pushed rates to record highs. The government fixes gas prices on the basis of international rates every six months. The price of gas more than doubled from April 1 to US$6.1 per mmBtu from old or regulated fields and to US$9.92 per mmBtu for difficult areas such as deep-sea areas.
The rates are to be revised in October. It is anticipated that the price of gas from old fields of state-owned Oil and Natural Gas Corporation (ONGC) will rise to around USD 9 per mmBtu and the limit for difficult fields will increase to double digits. Reliance produced around 19 million standard cubic meters of gas per day from its new fields in the eastern offshore KG-D6 block in the April-June quarter. The KG-D6 block is located in the deep sea and hence fetches an equivalent price for difficult areas.
Roy said, “The price range for KGD6 (R-cluster/SATS) has been revised to $9.92 per mmBtu for H1FY23 (April-September 2022) with further extension from H2FY23 (October 2022 to March 2023). are supposed to.” But this rate is linked to global prices. “We see that the domestic price cap remains disconnected, whether when prices rise or when prices fall. And you know, we are continuing our advocacy for removal of cap. Overall, we look forward to FY23. And expect higher gas price realizations in the quarters to come,” he said.
Reliance got a price of $22.48 per mmBtu for 0.7 mmscmd of gas produced from the coal seam (CBM) from the blocks in Madhya Pradesh. There is no cap on the price of CBM gas. Higher gas prices led to a growth of 80.5 per cent in revenue from business to Rs 3,625 crore and EBITDA (earnings before interest, tax, depreciation and amortization) by 76 per cent to Rs 2,737 crore during April-June Of.
Roy said the company expects the MJ field in the KG-D6 block to be operational by the third quarter of the current financial year, which will help take the production from the block to around 30 mmscmd. “Overall, the outlook is that once the MJ field is operational, we are on track to deliver over one billion cubic feet (30 mmscmd) per day by FY 24 (April 2023 to March 2024),” he added. Must go up.” On the rise in global gas prices, he said a shift in European demand from Russian gas to LNG and some supply disruptions are driving up prices. The benchmark JKM is currently trading at around $38 per mmBtu.
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“Therefore, the price hike continues and is to be expected given today’s challenges,” he added. He said the Indian gas market outlook remains strong, one of the reasons being the availability of domestic gas. “Because domestic gas is especially like KG-D6 where there is a price range and the demand is very high as compared to the market prices,” he said.
He further added, “Now, in terms of price range, as you all know and I mentioned earlier, the price should go up and we will see higher realizations. Hopefully, based on higher energy prices, it will go further. . UP.” Reliance and UK’s BP plc produce about 19 million standard cubic meters per day (mmscmd) of gas from two sets of new fields in Deepsea Block KG-D6. Reliance-BP is currently producing around 20 per cent of India’s total domestic production and MJ will help increase this to 30 per cent.
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