ONGC, GSPC to get higher price of gas

State-run Oil and Natural Gas Corp (ONGC) and Gujarat State Petroleum Corp (GSPC) are likely to fetch a minimum of 20 per cent premium over the $4.2 per million unit price fixed for Reliance Industries' gas field.     

UBS Investment Research in its latest report estimated that ONGC and GSPC may get at least $5.5 per million British thermal unit for natural gas they will pump out from their respective Krishna-Godavari basin blocks.     

"In India, we do not expect the gas price to reflect the international LNG price, but we do expect at least a 20 per cent increase over RIL's $4.2 per mmBtu for other projects that will come onstream in the early part of the next decade," it said.     

RIL is to get a fixed price of $4.2 per mmBtu for gas it would produce from Dhirubhai-1 and 3 fields in KG-D6 block from December-January, for the next five years.     

UBS estimated $4.5 per barrel of oil equivalent (boe) capital cost for RIL's D6 fields while $5.1 per boe for ONGC's KG-DWN-98/2 and $5.4 per boe for GSPC's Deen Dayal block.      

"Based on our estimated $40 billion value for its exploration and production (E&P) segment, we prefer RIL over ONGC and Cairn India," it said while fixing a target price of Rs 2,550 per share for the Mukesh Ambani run firm.     

For ONGC too it recommended a 'Buy' with a price target of Rs 1,138 and for CIL, UBS saw Rs 337 a share as the target price.     

"Considering limited exploration upside in the near term due to its lower focus on NELP blocks, ONGC is our least preferred stock," UBS report stated.