The government on Sunday cut the price of natural gas produced from difficult areas such as deep sea KG-D6 block of Reliance Industries, marginally to $9.87 per million British thermal unit (mBtu) in line with the softening of benchmark international gas prices, an official notification said.

However, the price of gas that is used for making CNG for fuelling automobiles or piping to household kitchens for cooking purposes will remain unchanged due to a price cap that is set at 30 per cent less than market rates such as that paid to Reliance.

For the six months starting April 1, the price of gas from deepsea and high-pressure, high-temperature (HPTP) areas has been cut to $9.87 per mBtu from $9.96, oil ministry’s Petroleum Planning and Analysis Cell (PPAC) said in a notification.

This is the third straight bi-annual reduction in rates for difficult fields.

Price was for six months beginning October 1, 2023, slashed 18 per cent to
$9.96 per mBtu from $12.12 for the April to September 2023 period.

Before that, the rate was a record $12.46 from October 2022 to March 2023.

The government bi-annually fixes prices of the locally-produced natural gas — which is converted into
CNG for use in automobiles, piped to household kitchens for cooking and used to
generate electricity and make fertilisers.

Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies such as Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deepsea.

Rates are fixed on April 1 and October 1 each year.

In April last year, the formula governing legacy fields was changed and indexed to 10 per cent of the prevailing Brent crude oil price. The rate was, however, capped at $6.5 per mmBtu.

Rates for legacy fields are now decided every month. For April, the price came to $8.38 per mBtu but because of the cap, the producers would get only $6.5 per mBtu, the PPAC said.

PTI