Page 9 - AsianOil Week 03 2023

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India to cap price on deepwater gas

INDIA INDIA’S central government has announced a imported from Qatar, with a cap in the region
cap on the price of natural gas produced from of INR16.62 ($0.20) per million British thermal
India wants to bring deepwater fields in a bid to help increase the units (mmBtu).
down domestic gas overall market share of gas in the nation’s energy Both caps are set to remain in place until early
prices. mix by the end of the decade. 2024, pending a review at that time.
Natural gas currently accounts for around Immediate reactions from gas producers in
6.2% of all energy consumed in India, but it is India have been mixed.
hoped to push this figure up to almost 15% An influential conglomerate of Reliance
by 2030, despite rising prices on gas markets Industries Ltd (RIL) and BP has already sus-
around the world, as demonstrated in significant pended a gas auction planned for January 24.
declines in sales to Asia in recent months. RIL and BP had been looking to sell up to
However, a nationwide cap as issued by 6mn cubic metres of natural gas per day for the
authorities in New Delhi last Friday initially next five years.
aimed at reducing profit margins for traders “It is hereby notified that the current bidding
reselling gas is seeing mixed reactions. process is suspended till further notice,” a state-
At present, the Indian government permits ment issued by the group said without offering
the sale of gas from offshore deepwater gas further details or any reason for the suspension.
deposits by those producing it to help firms off- At present, around 20% of India’s total gas
set initial cost-intensive discovery and retrieval production is retrieved from fields deemed
operations. “difficult to explore”, according to local media,
Sales in this manner are achieved through although that figure is predicted to increase in
online bidding close to the maximum regulated the years ahead.
amount permissible for gas, a figure itself put in Whether or not producers incurring costly
place by the central government. initial detection and subsequent retrieval costs
Selling on gas purchased in this manner, often will be willing to contribute to the government’s
to domestic buyers in heavy industry, is one way goals of increasing overall market share of nat-
producers and related entities increase profits. ural gas depends on the long-term response to
This is most often carried out in the form the current cap.
of direct negotiations between producers and Additionally, indications that gas usage
industry, or by way of online gas exchanges, is seen as too expensive by many were most
according to an official from India’s Ministry of clearly demonstrated in recent government data
Petroleum and Natural Gas. released covering the April to November period,
The missive issued by the government on which showed a 7.3% decline in total gas use
January 13, however, now limits trading mar- nationwide.
gins for sale to industries related to animal feed Most damning of all in the eyes of RIL and
and fertiliser production in addition to cook- others, however, may be the requirement that
ing gas producers to INR200 ($2.46) per 1,000 those bidding for gas at auction highlight
cubic metres. “whether they wish to purchase gas through the
For sales of deepwater gas to non-urea or auction for own use as end-consumers (includ-
cooking gas related industries, meanwhile, ing for use of their group entities) or as a trader”
transactions will be pegged to that of gas as worded by the central government. ™

Week 03 20•January•2023 www. NEWSBASE .com P9