The government has appointed Spanish speciality consultancy firm, Mercados Energy Markets International, to examine possibility of a uniform domestic price of natural gas, which is now sold at rates ranging from $1 to $5.73 per mmBtu depending on source.
The idea, a brainchild of Petroleum Secretary R S Pandey, aims to bring about uniformity in rates with a view to put all customers at par.
"We have selected Mercados EMI from an open tender," said B C Tripathi, chairman and managing director, GAIL India, which was appointed the nodal agency for doing the study.
Currently, the government fixes the price of gas produced from fields given on nomination to state-run ONGC and Oil India Ltd, while for others pricing is determined in line with the production sharing contracts. Under consideration is pooling or averaging out all prices of domestic natural gas and imported LNG to have a uniform price all over the country.
"The study will consider the feasibility of having a uniform cost price regime. The report is expected to be available by the first week of January," Tripathi said.
The gas from fields given to ONGC and OIL on nomination basis was sold at about $1.8 per mmBtu, while in the north-east it was priced at $1 to 1.2 per mmBtu.
Prices range from $3.5-5.73 per mmBtu for gas from the blocks that were awarded before the introduction of New Exploration and Licensing Policy (NELP) in 1999 and for which the block operators have signed contract with the government. For NELP gas, the government has fixed $4.205 per mmBtu as the sale price.
Industry sources said implementing a uniform gas pricing policy will not be easy as customers who have tied-up cheaper gas are bound to protest.
Bulk of the highly subsidised gas from ONGC goes to fertilizer and power plants. Since both are subsidised by the government, any move to increase the price (as a result of pooling) may lead to rise in government subsidies, thus may face opposition, sources said.
Currently, ONGC sells 48.52 million standard cubic meters per day of gas at $1.8 per mmBtu while gas from BG Group-operated Panna/Mukta and Tapti fields is sold at $5.56-5.73 per mmBtu.
Cairn India's 9 mmscmd Ravva gas is sold for $3.5-4.3 per mmBtu, while Reliance Industries sells gas from its KG D-6 fields for $4.205 per mmBtu.
