New Delhi : Natural gas prices in India may, from October 1, fall below $4.2 per unit, a rate that was used last year to devise a new pricing formula to incentivise domestic exploration, reports PTI.
Using prevailing price in gas surplus nations like the US, Russia and Canada, the government had in October last year announced a new pricing formula that led to rates rising by about 33 per cent to $5.61 per million British thermal unit (mmBtu) for a period up to March 31, 2015 from the long-standing price of $4.2.
The rates, on net calorific value (NCV) basis, dropped to $5.05 per mmBtu for six month period beginning April 1, 2015.
“Preliminary calculations based on average price in the gas hubs stated in the formula indicate that the rate from October 1 is likely to be $4.16 or $4.17 per mmBtu on NCV basis,” an Oil Ministry official said. On gross calorific value (GCV) basis, the rate will be about $3.8 per mmBtu as compared to $4.66 currently.
“These are preliminary calculations and final numbers may vary by a few cents but the general trend is that prices will fall,” he said. The October 1 price cut will be the second reduction in rates ever – the first being on April 1. While the cut will impact the revenue of producers like Oil and Natural Gas Corp (ONGC) and Reliance Industries, it will bring gains for users in the power and fertiliser sector in the form of lower feedstock cost.
Indian gas price is calculated by taking weighted average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta (Canada) and Russia with a lag of one quarter.
The current price of $5.61 per mmBtu is already among the lowest in Asia Pacific. China pays explorers $11.9 per mmBtu rate for new projects while Indonesia and the Philippines price the fuel at $11 and $10.5, respectively.
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RIL loses most profitable tag to IOC
Within two quarters of losing its 23-year-old reign as the country’s most profitable company to TCS in the December quarter, Reliance Industries was again humbled in the June quarter, this time by IndianOil.
The state-run firm booked Rs 118 crore more profit than the Mukesh Ambani-run firm net income of Rs 6,318 crore. Better refining margins arising from lower oil prices and almost full payback of subsidies by the government helped the nation’s biggest oil company Indian Oil Corporation to report a massive more than twofold jump in the June quarter net profit at Rs 6,436 crore. IOC’s refining margins soared to a seven-year high. The third most profitable company in the June quarter was Tata Consultancy Services with net income at Rs 5,684 crore for the June quarter, up 2% y-o-y, while its revenue rose 16% to Rs 25,668 crore. IOC also becomes the first domestic company to sniff at the billion-dollar club in quarterly earnings based on the closing price of the rupee on the earnings day (65.10).
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