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The petroleum ministry is set to invite comment from stakeholders and experts on the pricing methodology for natural gas produced from blocks located in deep-water, ultra deep-water, high-pressure and high-temperature areas.
Deep-water blocks are those located at depths of more than 1,000 metres, unlike shallow-water blocks (100-500 metres). Blocks at depths beyond 1,500 metres are classified ultra deep-water ones.
“We will consult stakeholders and experts on the matter of premium price for deep-water, ultra deep-water and high-pressure and high-temperature blocks, as we feel pricing for these three categories needs a little more work,” Petroleum Secretary Saurabh Chandra told the media.
On Saturday, the Union Cabinet had approved a 33 per cent rise in the price of natural gas — from the current $4.2 per million British thermal units (mBtu) to $5.61 per mBtu. It had also said all discoveries in deep-water, ultra deep-water, high-pressure and high-temperature areas would be given a premium on the new price. “These prices will be determined through a transparent process so that apprehension that there will be discretion in pricing is minimised. We are in the process of starting the consultations. We should have something in place in the coming year,” Chandra said.
Petroleum Minister Dharmendra Pradhan had told Business Standard there was a need to monetise discoveries in difficult terrains. “Under the new pricing regime, scientific data will be collected and the Directorate General of Hydrocarbons will conduct an analysis on a case-to-case basis to assess whether the stakeholder’s claim is genuine,” he had said in an interview on Monday.
When finalised, the policy for premium pricing is likely to benefit Reliance Industries Ltd (RIL), as most of the company’s explorations are in deep-water areas in the Krishna-Godavari basin. With the matter relating to cost recovery on account of production shortfall from the D1 and D3 discoveries under arbitration, RIL will be paid the earlier price of $4.2 an mBtu till the company makes good the shortfall in the quantity of gas.
Chandra also said the next round of bidding for oil and gas blocks under the New Exploration and Licensing Policy will be conducted after work on revising existing production-sharing contracts was completed.
