Page 9 - AsianOil Week 40 2021

AsianOil SOUTH ASIA AsianOil

India raises gas prices

POLICY THE Indian government has increased natural
gas prices for the majority of the country’s pro-
duction by 62% for the next six months.
The Ministry for Petroleum and Natural Gas’
Petroleum Planning and Analysis Cell (PPAC)
announced on September 30 that rates for New
Exploration Licensing Policy (NELP) and pre-
NELP blocks for the six months from October 1
would climb from $1.79 per mmBtu ($49.51 per
1,000 cubic metres) to $2.9 per mmBtu ($80.21
per 1,000 cubic metres)
At the same time, the government raised the
price ceiling for gas produced from challenging
fields, such as deepwater permits, from $3.62 per
mmBtu ($100.13 per 1,000 cubic metres) to $6.13
per mmBtu ($169.56 per 1,000 cubic metres).
“The domestic gas price increase was driven
by the significant run-up in the prices of gas
at global gas hubs. The increase in gas prices
provides limited relief to Indian upstream pro-
ducers, as even at these prices, gas production
remains a loss-making proposition for most
fields for the Indian upstream producers, not- The former chairman of state-run Oil and
withstanding some decline in oilfield services/ Natural Gas Corp. (ONGC), Shashi Shanker,
equipment costs,” credit rating agency ICRA’s said last year that the current system of pricing
senior vice-president and head of corporate sec- used for the majority of the country’s produc-
tor ratings Sabyasachi Majumdar said. tion made little sense. Prior to his exit in June,
New Delhi sets domestic gas prices every Shanker argued that the country needed to move
six months using the weighted average price away from a system that adopted an average
of gas at hubs in the US, Canada, the UK and price determined in gas-rich hubs to set rates in
Russia. These tariffs are also set at a three- a gas-poor market.
month lag to prevailing market rates at those ONGC has told the government that devel-
hubs and come with a built-in $0.50 per oping new gas discoveries requires a price of
mmBtu ($13.83 per 1,000 cubic metres) dis- $5-9 per mmBtu ($138.3-248.94 per 1,000 cubic
count to the international average. metres) just to break even.™

Cairn India pledges to

boost oil, gas production

PROJECTS & CAIRN India, the upstream arm of Vedanta, Japan-Korea-Marker (JKM) hit $56.326 per
COMPANIES has pledged to produce half of the South Asian mmBtu on October 6 for a cargo delivered into
giant’s oil and gas within the next three years. Northeast Asia in November.
Vedanta chairman Anil Agarwal confirmed “To reduce the oil price, Cairn Oil and Gas is
the pledge in an October 5 tweet, adding that the committed to producing 50% [of India’s] oil and
company’s goal was driven by a desire to reduce gas … within two-three years’ time. The entire
the country’s import bill. industry appreciates the government efforts in
India relies on imports to meet more than streamlining the process to boost production
80% of the country’s oil demand and more than and attract more global companies to invest in
50% of its natural gas consumption. While the India,” Agarwal tweeted.
international Brent benchmark hit a seven-year The Indian government has been trying for a
high on October 5, reaching $81.77 per barrel number of years to boost domestic production in
during early trading, prices for spot LNG cargoes an effort to reduce import dependency.
into Asia have repeatedly set records this year. New Delhi’s latest efforts included
Price agency S&P Global Platts’ the decision in early August to scrap the

Week 40 07•October•2021 www. NEWSBASE .com P9