According to the survey conducted by analysts and industry groups, the government of India is planning to increase the prices of domestic natural gas than done in last 2 years. This price hike will multiply the profits of producer companies such as Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd.
In 2017 October, for the first time, India had increased their natural gas prices to $2.89 nearly after three years. However, it is now planning to further elevate the costs. The survey suggests an estimated range between $3.05 to $3.30 per British thermal units (mmBtu).
The revenue generated from this hike will aid in the development and production of Indian energy and utility sector. Along with this, it will also reduce the energy imports from other countries.
Gagan Dixit, an analyst at Elara Securities India Pvt. stated, “At the current volume of production, every dollar increase in domestic gas prices boosts the annual revenue of ONGC by about 41 billion rupees and post-tax profit by about 27 billion rupees.”
After every six months, India regulates the price range. But this time it has planned on increasing the costs by 11% greater than the current price of $2.89. The $3.2 mmBtu increase is made for the upcoming months of April to September.
It has been reported that, about 64 million cubic metres a day of natural gas was produced by ONGC in the last 10 months. This constitutes about 72% of India’s total gas output.
In addition to this, natural producers using other methods like generating gas from deep-water fields with high pressure and high temperature areas are permitted to add increased duty costs of about $6.30 per mmBtu.
Also Read:- 5 Reasons why FDI are increasing in Indian Oil and Gas Sector