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NEW DELHI: In a bonanza for gasoline producers, Reliance Industries is about to get a file worth of round $10 per MMBtu for the KG gasoline, whereas state-owned ONGC is prone to fetch greater than double the speed for its Mumbai Excessive and different fields, sources mentioned.
The federal government-dictated worth for pure gasoline produced within the nation is to be revised on April 1 and factoring within the spike in power costs witnessed final yr, the speed paid for gasoline produced from fields given to state-owned Oil and Pure Gasoline Company (ONGC) on nomination foundation is prone to rise to $5.93 per million British thermal items from present $2.9.
Concurrently, troublesome fields like those in Reliance and its associate bp plc operated D6 block in KG basin, are prone to get $9.9-10.1 worth in comparison with the present charge of $6.13, two sources conscious of the matter mentioned.
These are the best charges for administered/regulated fields (like ONGC’s Bassein area off the Mumbai coast) and free-market areas (such because the KG basin).
Additionally, this would be the second enhance in charges since April 2019 and comes on the again of firming benchmark worldwide costs.
The federal government units the value of gasoline each six months — on April 1 and October 1 — every year primarily based on charges prevalent in gasoline surplus nations such because the US, Canada and Russia in a single yr with a lag of 1 quarter.
So, the value for April 1 to September 30 relies on the typical worth from January 2021 to December 2021. That is the interval when world charges shot by way of the roofs.
The quantity-weighted common of the value prevalent in a 12-month interval in US-based Henry Hub, Canada-based Alberta gasoline, UK-based NBP and Russia gasoline are used to repair worth for administered fields of ONGC and Oil India Ltd.
For troublesome fields like discoveries in deepwater, ultra-deepwater and excessive pressure-high temperature areas, a barely modified components is utilized by incorporating the value of LNG, which too had shot by way of the roof in 2021.
Reliance-bp operated KG fields are categorised as troublesome fields.
The sources mentioned the rise in gasoline worth is prone to lead to an increase in CNG and piped cooking gasoline charges in cities, similar to Delhi and Mumbai.
It is going to additionally result in an increase in the price of producing electrical energy however shoppers could not really feel any main pinch because the share of energy produced from gasoline could be very low.
Equally, the price of producing fertiliser may even go up however as the federal government subsidises the crop nutrient, a rise in charges is unlikely.
For producers, this would be the first time in six years that they’ll get a remunerative worth.
ONGC had been incurring losses on the 65 million customary cubic meters per day of gasoline it produces from home fields shortly after the federal government in November 2014 launched a brand new gasoline pricing components that had “inherent limitations” because it was primarily based on pricing hubs of gasoline surplus nations such because the US, Canada, and Russia.
The sources mentioned ONGC had in a number of communications to the federal government has acknowledged that the break-even worth to supply gasoline from new discoveries was within the vary of $5-9 per MMBtu and that for outdated fields similar to Mumbai Excessive and Bassein is about $3.6-3.7.
The Congress-led UPA had permitted a brand new pricing components for implementation in 2014 that may have raised the charges, however the BJP-led authorities scrapped it and introduced a brand new components.
The brand new components takes under consideration the volume-weighted annual common of the costs prevailing in Henry Hub (US), Nationwide Balancing Level (the UK), Alberta (Canada), and Russia with a lag of one-quarter.
The speed on the first revision, utilizing the brand new components, got here to $5.05 however within the subsequent six-monthly critiques stored falling until it touched $2.48 for April 2017 to September 2017 interval.
Subsequently, it rose to $3.69 in April 2019-September 2019 earlier than being lower in subsequent rounds to $1.79.
The federal government-dictated worth for pure gasoline produced within the nation is to be revised on April 1 and factoring within the spike in power costs witnessed final yr, the speed paid for gasoline produced from fields given to state-owned Oil and Pure Gasoline Company (ONGC) on nomination foundation is prone to rise to $5.93 per million British thermal items from present $2.9.
Concurrently, troublesome fields like those in Reliance and its associate bp plc operated D6 block in KG basin, are prone to get $9.9-10.1 worth in comparison with the present charge of $6.13, two sources conscious of the matter mentioned.
These are the best charges for administered/regulated fields (like ONGC’s Bassein area off the Mumbai coast) and free-market areas (such because the KG basin).
Additionally, this would be the second enhance in charges since April 2019 and comes on the again of firming benchmark worldwide costs.
The federal government units the value of gasoline each six months — on April 1 and October 1 — every year primarily based on charges prevalent in gasoline surplus nations such because the US, Canada and Russia in a single yr with a lag of 1 quarter.
So, the value for April 1 to September 30 relies on the typical worth from January 2021 to December 2021. That is the interval when world charges shot by way of the roofs.
The quantity-weighted common of the value prevalent in a 12-month interval in US-based Henry Hub, Canada-based Alberta gasoline, UK-based NBP and Russia gasoline are used to repair worth for administered fields of ONGC and Oil India Ltd.
For troublesome fields like discoveries in deepwater, ultra-deepwater and excessive pressure-high temperature areas, a barely modified components is utilized by incorporating the value of LNG, which too had shot by way of the roof in 2021.
Reliance-bp operated KG fields are categorised as troublesome fields.
The sources mentioned the rise in gasoline worth is prone to lead to an increase in CNG and piped cooking gasoline charges in cities, similar to Delhi and Mumbai.
It is going to additionally result in an increase in the price of producing electrical energy however shoppers could not really feel any main pinch because the share of energy produced from gasoline could be very low.
Equally, the price of producing fertiliser may even go up however as the federal government subsidises the crop nutrient, a rise in charges is unlikely.
For producers, this would be the first time in six years that they’ll get a remunerative worth.
ONGC had been incurring losses on the 65 million customary cubic meters per day of gasoline it produces from home fields shortly after the federal government in November 2014 launched a brand new gasoline pricing components that had “inherent limitations” because it was primarily based on pricing hubs of gasoline surplus nations such because the US, Canada, and Russia.
The sources mentioned ONGC had in a number of communications to the federal government has acknowledged that the break-even worth to supply gasoline from new discoveries was within the vary of $5-9 per MMBtu and that for outdated fields similar to Mumbai Excessive and Bassein is about $3.6-3.7.
The Congress-led UPA had permitted a brand new pricing components for implementation in 2014 that may have raised the charges, however the BJP-led authorities scrapped it and introduced a brand new components.
The brand new components takes under consideration the volume-weighted annual common of the costs prevailing in Henry Hub (US), Nationwide Balancing Level (the UK), Alberta (Canada), and Russia with a lag of one-quarter.
The speed on the first revision, utilizing the brand new components, got here to $5.05 however within the subsequent six-monthly critiques stored falling until it touched $2.48 for April 2017 to September 2017 interval.
Subsequently, it rose to $3.69 in April 2019-September 2019 earlier than being lower in subsequent rounds to $1.79.
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