Government approves 20% premium price hike for gas from new ONGC wells
OIL & GAS

Government approves 20% premium price hike for gas from new ONGC wells

The government has sanctioned a 20% premium over the regulated price for natural gas produced from new wells by Oil and Natural Gas Corporation (ONGC). This decision aims to enhance the viability of new gas development projects. Currently, domestic gas pricing operates under two main regimes. Gas from legacy fields, managed by ONGC and Oil India Ltd, is priced at 10% of the imported crude oil price, capped at $6.50 per million British thermal units (mmBtu). For instance, with the Indian crude oil basket price at $77 per barrel, the APM price for ONGC's gas from Mumbai High and Bassein fields would be $7.70 per mmBtu, but the cap price is applied. Gas from challenging fields, such as deep-sea locations, is priced higher due to increased production costs. For the six months starting April 1, this rate is set at $9.87 per mmBtu. Under last year's guidelines, a 20% premium over the APM price was established for gas from new wells, even within legacy fields. The Ministry of Petroleum and Natural Gas has now officially implemented this premium. ONGC stated, ?The domestic gas price (APM price) is fixed at 10% of the Indian crude basket price as announced by the Petroleum Planning and Analysis Cell (PPAC) monthly. The guidelines included a 20% premium for gas from new wells or interventions in ONGC/Oil India Ltd?s nominated fields, totalling 12% of the Indian crude basket price for new gas.? This policy adjustment is expected to improve the viability of new gas projects, helping ONGC increase production in challenging areas that require significant investment and technology. ONGC's board recently approved the Rs 78 billion Daman Upside Development project in the Mumbai High field, aiming for peak production of about 5 million standard cubic meters per day. Another project, involving the integrated development of four contract areas under DSF-II, was approved with a cost of Rs 60 billion and a peak production target of around 4 mmscmd. This project benefits from pricing and marketing freedom under the DSF Policy. ?The implementation of this policy supports the national goal of raising the share of natural gas in India?s energy mix from 6% to 15% by 2030,? ONGC added. (ET)

The government has sanctioned a 20% premium over the regulated price for natural gas produced from new wells by Oil and Natural Gas Corporation (ONGC). This decision aims to enhance the viability of new gas development projects. Currently, domestic gas pricing operates under two main regimes. Gas from legacy fields, managed by ONGC and Oil India Ltd, is priced at 10% of the imported crude oil price, capped at $6.50 per million British thermal units (mmBtu). For instance, with the Indian crude oil basket price at $77 per barrel, the APM price for ONGC's gas from Mumbai High and Bassein fields would be $7.70 per mmBtu, but the cap price is applied. Gas from challenging fields, such as deep-sea locations, is priced higher due to increased production costs. For the six months starting April 1, this rate is set at $9.87 per mmBtu. Under last year's guidelines, a 20% premium over the APM price was established for gas from new wells, even within legacy fields. The Ministry of Petroleum and Natural Gas has now officially implemented this premium. ONGC stated, ?The domestic gas price (APM price) is fixed at 10% of the Indian crude basket price as announced by the Petroleum Planning and Analysis Cell (PPAC) monthly. The guidelines included a 20% premium for gas from new wells or interventions in ONGC/Oil India Ltd?s nominated fields, totalling 12% of the Indian crude basket price for new gas.? This policy adjustment is expected to improve the viability of new gas projects, helping ONGC increase production in challenging areas that require significant investment and technology. ONGC's board recently approved the Rs 78 billion Daman Upside Development project in the Mumbai High field, aiming for peak production of about 5 million standard cubic meters per day. Another project, involving the integrated development of four contract areas under DSF-II, was approved with a cost of Rs 60 billion and a peak production target of around 4 mmscmd. This project benefits from pricing and marketing freedom under the DSF Policy. ?The implementation of this policy supports the national goal of raising the share of natural gas in India?s energy mix from 6% to 15% by 2030,? ONGC added. (ET)

Related Stories

Gold Stories

Next Story
Real Estate

L&T Wins Mega Order for India’s Largest NVIDIA B300 AI Factory

Larsen & Toubro (L&T), through Vyoma.AI’s AI infrastructure subsidiary LTN Compute, has secured a mega order to develop what the company describes as India’s largest single-cluster AI infrastructure facility. The NVIDIA B300 AI Factory will support US-based AI cloud company Together AI’s platform for large-scale inference, fine-tuning and training workloads.The integrated AI Factory will be hosted at Vyoma.AI’s Chennai data centre campus and will have a capacity of 10,000 NVIDIA B300 GPUs. The platform will combine hyperscale data centre infrastructure, accelerated computing, h..

Next Story
Infrastructure Urban

Autodesk Elevates Nikhil Bagalkotkar to Lead AEC in India, SAARC

Autodesk has elevated Nikhil Bagalkotkar as Head – Architecture, Engineering and Construction (AEC), India and SAARC, with immediate effect.In his new role, Bagalkotkar will lead Autodesk's AEC business strategy across the region and drive adoption of the company's Design and Make platform. He will also focus on promoting digital design and construction technologies to help customers accelerate innovation and deliver more sustainable and resilient infrastructure.Bagalkotkar will be responsible for expanding Autodesk's AEC business, strengthening customer and partner engagement, and accelerat..

Next Story
Real Estate

Listed Developers' Pre-Sales Seen Rising 22.3 Per Cent in FY27

India's leading listed residential developers are expected to sustain strong sales momentum in FY27, with combined pre-sales of 11 major players projected to rise 22.3 per cent year-on-year, according to an analysis by ANAROCK Research & Advisory.Combined pre-sales of the developers are estimated to increase from Rs 1.49 trillion in FY26 to Rs 1.82 lakh crore in FY27. ANAROCK attributed the growth to sustained end-user demand, new project launches and strong execution despite higher property prices, construction costs and global uncertainties.Dr Prashant Thakur, Executive Director and Head..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement