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regular-article-logo Monday, 23 December 2024

Reliance Industries to gain from gas price hike

The domestic natural gas price produced in the country could increase further from the current $9.92 per million British thermal unit (mBtu) for April-September applicable for deep fields

R. Suryamurthy New Delhi Published 31.08.22, 12:51 AM
Indications are that the formula driven natural gas pricesfrom other fields could touch$10 per mBtu from October

Indications are that the formula driven natural gas pricesfrom other fields could touch$10 per mBtu from October File picture

The spike in global gas prices will help RelianceIndustries as it plans to start producing natural gas from the MJ field by year-end.

The domestic natural gas price produced in the country could increase further from the current $9.92 per million British thermal unit (mBtu)for April-September applicable for deep fields.

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Indications are that the formula driven natural gas prices from other fields could touch $10 per mBtu from October. The government had morethan doubled the price of domestically produced natural gas to a record high of $6.10 per (mBtu) for six months from April 1 — for the other gas fields.

The government sets the price of gas every six months — on April 1 and October 1 —based on rates in gas surplus nations such as the US, Canada and Russia.

While the increase in prices of gas benefits the producers, it would have a significant impact on user industries such as fertiliser, power, domestic piped gas and CNG.

The price hike leads to a rise in the cost of generating electricity but consumers may not feel any major pinch as the share of power produced from gas is very low.

Similarly, the cost of producing fertiliser will also go up but as the government subsidises the crop nutrient, an increase in rates is unlikely. But it would raise subsidies.

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