25 Jul 2022 , 08:58 AM
Reliance Industries Ltd. anticipates a hike in natural gas prices in India in October but opposes government-imposed limitations in an effort to bring domestic prices in line with international energy costs.
Sanjay Roy, senior vice-president for exploration and production, stated in an investor call held on Friday after the company’s quarterly earnings were released that the conglomerate–controlled by billionaire Mukesh Ambani–expects the price cap for its KG-D6 gas sales to increase over the current USD 9.92 per million British thermal units.
Reliance’s gas exploration division has started to profit from a global spike in energy prices that has already sent the rates to record highs after staying a loss-making provision for several quarters.
Every six months, the government sets gas prices based on market rates from around the world.
From April 1, the cost of gas from old or regulated fields more than doubled to a record-high USD 6.1 per mmBtu, and it increased to USD 9.92 for challenging fields, such as those located in the deep ocean.
Rates must be updated by October. The price of gas from the state-owned Oil and Natural Gas Corporation’s (ONGC) old fields is expected to increase to around USD 9 per mmBtu, and the cap for challenging fields is expected to increase to double digits.
In the April to June quarter, Reliance produced roughly 19 million standard cubic metres of gas per day from its younger fields in the eastern offshore KG-D6 block. Since the KG-D6 block is located in deep water, it is priced similarly to fields with challenging terrain.
For the 0.7 mmscmd of gas it generates from coal seams (CBM) from blocks in Madhya Pradesh, Reliance received a price of USD 22.48 per mmBtu. The cost of CBM gasoline is not capped.
During the months of April through June, the company’s revenue increased by 80.5% to Rs3,625 crore due to higher gas prices, while its EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by 76.0% to Rs2,737 crore.
Currently, Reliance-BP produces roughly 20% of all domestic output in India; with the help of MJ, this might rise to 30%.
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