Objection to New Gas Pricing Guidelines

Objection to New Gas Pricing Guidelines

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that government has received representations from domestic gas producers for allowing them freedom to sell gas at market determined prices. Representations have also been received from Association of Oil and Gas operators(AOGO), Confederation of Indian Industry(CII) etc. bringing out certain issues related with New Gas Pricing Guidelines, 2014. Some of the issues pointed out by these associations include:

• Inclusion of the Russian domestic price in the formula

• The deduction of prices to delivery point and treatment charges form the gas price

• Applicability of premium for only new discoveries post 1st November

• The new price formula contains parameters which are not relevant to a Hydrocarbon Deficit Economic like India

The prices considered in the new gas pricing formula are the closest approximations for the Market price for gas in the region. Russian domestic price has been included in the formulae as Russia is amongst the largest producers and consumer of natural gas in the world. Through the New Gas Pricing Guidelines 2014, Government has tried to maintain a fine balance between the interest of gas producing and consuming sectors. To incentivize domestic production of natural gas, Government while approving the gas pricing formula, has also approved a provision for grant of premium for new discoveries made in Deep water, Ultra Deep water and High Pressure High Temperature reservoir.