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    Domestic gas price hiked 62% to $2.9/MMBtu.


    October 6, 2021 - Business Standard (CBNB Abstracts)

     

      On 30 Sep 2021, the cost of locally-generated natural gas has been increasing to $2.9 per million British thermal units (MMBtu) for Oct 2021-Mar 2022 period. The ceiling value of natural gas produced from ultra-deepwater, deepwater, and high pressure, high temperature (collectively 'difficult') discoveries has also grew to $6.13/MMBtu. These costs have expanded by nearly 100% from the level determined by the government for the Apr-Sep 2021 period. Local gas cost reached $1.79/MMBtu, while the ceiling value for difficult gas was at $3.62/MMBtu. This will indicate that more expensive transport through higher compressed natural gas and cooking through piped natural gas. The growths come after the firming up of gas costs on world benchmarks that dictate local rates. Domestic gas values are based on the weighted average cost of natural gas that is common in benchmark markets over a three-month period. This cost is then adopted by the Indian government for the local market following a lag of three more months. This indicates that the gas value for Oct 2021-Mar 2022 is determined based on the world costs from Apr-Jun 2021. The present prices place substantial pressure on upstream firms that are in the business of exploring and generating natural gas. BP (formerly The British Petroleum Company), Oil India, Oil and Natural Gas Corporation (ONGC), Reliance Industries (RIL), and Cairn Oil & Gas (a unit of Vedanta) are among the top players that will benefit from a higher gas cost. BP and RIL's R-Cluster, an ultra-deepwater gas field in block KG-D6, off the east Indian coast, and ONGC's KG-DWN98/2 project are some of the projects that will benefit from the cost increase. A bar graph shows the trend of gas prices ($/MMBtu) in India from Apr-Sep 2019 to Oct 2021-Mar 2022 periods. Original Source: Business Standard, http://www.business-standard.com/.

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