The Indian government has revised natural gas prices, allowing Oil & Natural Gas Corporation (ONGC) and Oil India to impose a 20 percent surcharge on the administrative pricing mechanism (APM).
With this step, we want to make new gas production projects economically viable, especially in areas that require a lot of capital and cutting-edge technology.
In the Indian oil and gas sector, the APM is a government-controlled system that sets the prices of petroleum products.
As per the domestic gas pricing guidelines, the APM price for natural gas has been fixed at 10% of the basket price of Indian crude oil determined monthly by the Petroleum Planning and Analysis Cell (PPAC).
In a statement, ONGC said: “The higher price of new gas will make the new gas development projects viable and help ONGC increase natural gas production from select fields in challenging areas that require higher capital and technology outlay.”
“This will increase the company’s investment capacity to tackle development projects that are otherwise capital intensive and carry higher risk, requiring corresponding pricing.”
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At the same time, ONGC announced its decision to invest around Rs 138 billion in two projects.
It plans to invest Rs 78 billion in the Daman Upside Development project at Mumbai High Field.
The project, which is already underway, is expected to reach a peak production of around five million standard cubic metres per day (mscm/d).
In addition, the Board of ONGC has approved the integrated development of four contract areas under Discovered Small Fields Policy (DSF-II) at an estimated cost of Rs 60 billion.
This project, which has price and marketing freedom under the DSF policy, targets a peak production of about 4 million cubic metres per day.
The start of the implementation of this project has been announced.
This policy change is in line with India’s target to increase the share of natural gas in its energy mix from the current 6% to 15% by 2030.
This target supports India’s broader energy and environmental goals.
Last week, ONGC received government approval for an additional investment of Rs 183.65 billion in ONGC Petro Additions Limited (OPaL).
This capital injection is intended to increase ONGC’s stake in the petrochemical company and thereby improve OPaL’s financial stability and operational efficiency.
