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India cuts natural gas prices
POLICY
THE Indian government has reduced the price of locally produced natural gas for six months from October 1, the first such cut in more than two years.
Gas prices were cut by 12.5% from $3.69 per million British thermal units ($102.07 per 1,000 cubic metres) in April-September to $3.23 per mmBtu ($89.34 per 1,000 cubic metres), accord- ing to the Petroleum Planning and Analysis Cell (PPAC). The PPAC is a division of the Ministry of Petroleum and Natural Gas.
At the same time, the government reduced the price of gas produced from technically chal- lenging fields by 9.5% from $9.32 per mmBtu ($257.79 per 1,000 cubic metres) to $8.43 per mmBtu ($233.17 per 1,000 cubic metres), the PPAC said. Prices for difficult fields, such as deepwater and high-pressure-high-temper- ature (HPHT) fields, enjoy a higher cap to encourage explorers to take on such expensive developments.
The Indian government sets domestic gas prices in line with the average gas prices in the US, UK, Canada and Russia. Prices of natural gas are set for six-month periods on April 1 and October 1 each year. The latest adjustment fol- lows four consecutive price hikes and is the first cut since April 2017.
The government’s pricing mechanism has been criticised by the industry and analysts as failing to reflect market fundamentals accurately. The US, UK, Canada and Russia are gas surplus hubs, while India relies on imports to meet more
than half of its demand. As such, critics argue that natural gas prices should be set by the open market, which would lead to higher rates that would in turn encourage developers to invest more in developing local reserves.
Upstream reforms have introduced market pricing for new gas fields, but producers want similar pricing incentives for existing blocks.
While lower gas prices will eat into the bottom lines of producers, it will mean lower bills for industry and residential users, which will encourage demand. The govern- ment wants to raise natural gas’ share of the primary energy mix from around 6.5% at present to 15% by 2030.™
ONGC plans domestic drilling campaigns
PROJECTS & COMPANIES
STATE-RUN Indian major Oil and Natural Gas Corp. (ONGC) is reportedly seeking the Ministry of Environment’s approval to begin a 44-well onshore drilling campaign in the coun- try’s south-east.
India’s largest oil and gas producer submit- ted its development plans on October 1 and is intending to drill the wells at two projects located in the Cauvery Basin, local daily New Indian Express said citing company docu- ments. The wells will be spread over the Cud- dalore, Nagapattinam, Ramanathapuram and Sivaganga districts in Tamil Nadu State as well as in the Karaikal district of the Union Terri- tory of Puducherry.
The paper said ONGC’s head of geology for Block-1 Cauvery Basin, M Giridhar, had
submitted the application seeking terms of ref- erence (ToR) for an impact assessment study.
One of the projects will see 15 wells spudded in Nagapattinam and another five in Cuddalore and Karaikal, New Indian Express said. Each well will take 90-120 days to drill and, if the company finds commer- cial levels of hydrocarbons, will be tested over two to three days.
Details for the second project were not revealed. The paper noted that ONGC had sub- mitted proposals for 215 wells in Tamil Nadu this year, while privately owned Cairn Oil and Gas had proposed another 274.
As ONGC prepares to ramp up spending in the south-east, it is also planning to drill 220 wells in the north-eastern state of Assam.
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w w w . N E W S B A S E . c o m Week 39 02•October•2019