Oil and gas stocks turn volatile after Govt slashes natural gas prices

Shares of gas producers and distributors were in action after the government cut the price of locally produced gas for October 2020-March 2021 by about a quarter to a multi-year low of $1.79 per million metric British thermal units (mmBtu).

The Petroleum Planning & Analysis Cell (PPAC) said that the price of domestic natural gas awarded to state explorers for the six month period beginning 1 October 2020 is $1.79 per million British thermal units (mmBtu), which is lower by 25.1% compared with $2.39 per mmBtu paid to the state explorers for the April 2020 to September 2020 period.

The gas price ceiling for gas produced from difficult fields has been reduced by 27.6% to $4.06 per mmBtu for the October 2020 to March 2021 period from the previous rate of $5.61 per mmBtu, PPAC said in statement.

Lower natural gas prices mean reduced costs for gas for fertilisers, automobiles and households. It would also impact earnings of domestic producers such as ONGC and OIL.

ONGC fell 1.15% to Rs 68.50 and Oil India declined 1.78% to Rs 88.15.

However, city gas distributors, Mahanagar Gas (up 3.96% to Rs 863), Indraprastha Gas (up 2.38% to Rs 396.25) and Gujarat Gas (up 1.72% to Rs 313) advanced.

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