ONGC Gets 20% Price Boost for Gas from New Wells

13 Aug 2024 , 10:02 AM

For any natural gas that ONGC produces from new wells, the government has allowed a 20% premium over the regulated or APM price, the firm announced on Monday. The majority of natural gas produced domestically is currently controlled by two price regimes. Natural gas is used to make electricity, fertilizer, CNG for automobiles, and is piped to homes for cooking.

The price of gas extracted from fields that are left over or that are nominated to the state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd is set at 10% of the current price of crude oil that India purchases.

This price is known as the regulated or APM price. It is subject to a cap price of USD 6.5 per million British thermal units. Therefore, the APM price for gas produced from ONGC’s Mumbai High and Bassein fields in the western offshore should be USD 7.7 per mmBtu at the current Indian basket price of USD 77 per barrel; but, it is only paid the USD 6.5 cap price.

Because producing gas from challenging areas, including those in the deep sea, entails higher costs, it is subject to a separate formula and is paid at a higher rate. That costs $9.87 USD per mmBtu for a period of six months beginning on April 1.

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