Gas price for Reliance cut by 18% to $10; CNG input unchanged at $6.5

NEW DELHI: The price of natural gas produced from difficult areas like deepsea KG-D6 block of Reliance Industries on Sunday was cut by a steep 18 per cent, in line with softening of benchmark international gas prices, an official notification said.

However, the price of gas that is largely used for making CNG for fuelling automobiles or piping to households kitchens for cooking purposes will remain unchanged due to a price cap that is set at 30 per cent less than market rates such as that paid to Reliance.

For the six-month period starting October 1, the price of gas from deepsea and high-pressure, high-temperature (HPTP) areas has been cut to $9.96 per million British thermal unit from $12.12, oil ministry’s Petroleum Planning and Analysis Cell (PPAC) said in a notification.

The government bi-annually fixes prices of the locally-produced natural gas -- which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers.

Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deepsea.

Rates are fixed on April 1 and October 1 each year.

In April this year, the formula governing legacy fields was changed and indexed to 10 per cent of the prevailing Brent crude oil price. The rate was, however, capped at $6.5 per mmBtu.

Rates for legacy fields are now decided on a monthly basis. For September, the price came to $8.60 per mmBtu but because of the cap, the producers would get only $6.5 per mmBtu. For September, the price came to $9.2 per mmBtu but because of the cap, consumers will continue to pay ONGC and OIL $6.5.

Brent crude oil has averaged around $92 per barrel this month but rates will continue to be capped at $6.5.