10% rise likely in APM gas price for non-core sectors

The government is planning to raise the price of state-administered, or APM, gas sold to sectors other than power and fertiliser by over 10 per cent to $5.25 per million British thermal unit (mBtu).

Natural gas produced by state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) from fields given to them on a nomination basis is sold under the administered pricing mechanism and is referred to as APM gas.

While the government had recently raised the price of APM gas sold to power and fertiliser units from about $1.79 to $4.20 per mBtu, including royalty, the rate for gas sold to non-core sector industries remained at $4.75 per mmBtu, an official said.

The price ONGC will get is higher than the $4.205 per mBtu rate set for Reliance's eastern offshore KG-D6 fields.

"A proposal to hike the price for non-power and fertiliser consumers to $5.75 from $4.75 per mBtu is awaiting approval at the highest level," he said. "The nod may come any day now."

About one-fourth of the country's daily output of 57 million standard cubic metres of APM gas is sold to consumers in non-core sectors, like steel and petrochemicals.

Prior to this, the oil ministry had issued guidelines on June 28 on the price national oil companies like ONGC can charge for natural gas they produce from new fields in blocks given to them on a nomination basis, the official said.

ONGC is to get $5.25 per mBtu for the gas it produces from new fields in nominated blocks in the western offshore and $5 per mBtu for fields in the Cauvery Basin. It will get $4.75 per mBtu for fields in the Krishna-Godavari Basin, off the Andhra Pradesh coast.

The price approved is more than $3.818 per mBtu ($4.2 after including royalty) that the government had set for gas ONGC produces from its operational fields in blocks given to it on a nomination basis.

"National oil companies would charge a non-APM price for gas produced from new fields in nominated blocks," the oil ministry order of June 28 said.