Domestic natural gas price kept unchanged at $1.79 per mmBtu for April-September

The price of domestically-produced natural gas was kept unchanged for the April-September period for the financial year 2021-22 (FY22). The price of domestic natural gas for the period of April 1 to September 30 in 2021 was kept at $1.79 per million metric British thermal units (mmBtu) on a gross calorific value basis.

A price notification by the Petroleum Planning and Analysis Cell (PPAC), an arm of the Ministry of Petroleum and Natural Gas, said domestically produced natural gas would continue to be sold at $1.79 a million metric British thermal units (mmBtu) on a gross calorific value basis from April 1, 2021, to September 30, 2021.

For the natural gas produced from difficult fields, like deepwater, ultra-deepwater and high-pressure high-temperature areas, the price has been reduced to $3.62 per mmBtu from $4.06 per mmBtu, which was applicable for October 2020 to March 2021 period. With Covid-19 restrictions easing and demand to recover, the global gas price volatility was expected to push up domestic prices too.

Keeping the gas price unchanged is something for which the consumers of the piped natural gas (PNG) can cheer as they will get cooking fuel at current rates. The decision will also keep the costs of public transportation under check, mainly in Delhi, as Compressed Natural Gas is expected to be sold at the same price by Indraprastha Gas.

The decision to keep the domestically produced gas prices unchanged will have an impact on the shares of oil-producing companies like ONGC, Oil India, GAIL, RIL as well as Fertilizer Companies, Ceramic Companies, Power Companies.

Mechanism to fix the Natural Gas Prices

The price for the domestically produced natural gas prices is decided once every six months based on a formula depending on the weighted average of global gas hubs like Henry Hub, Alberta gas, NBP and Russian gas. The ministry of petroleum and natural gas had plans to set a floor price for natural gas and to take a call on this, a committee with representatives ONGC, OIL, GAIL and PPAC had submitted a report in late 2020.