The Ministry of Petroleum and Natural Gas on April 07, 2023, issued a notification regarding the review of the New Domestic Gas Pricing Guidelines, 2014.
The following has been stated-
•New Exploration Licensing Policy (NELP) blocks and pre-NELP blocks, where the Production Sharing Contract (PSC) provides for the Government's approval of prices.
•The price of such natural gas shall be 10% of the monthly average of Indian Crude Basket and shall be notified on a monthly basis. For the gas produced by ONGC & OIL from their nomination blocks, the Administered Price Mechanism (APM) price shall be subject to a floor and a ceiling. Gas produced from new wells or well interventions in the nomination fields of ONGC & OIL would be allowed a premium of 20% over the APM price.
•The new guidelines are intended to ensure a stable pricing regime for domestic gas consumers while at the same time providing adequate protection to producers from adverse market fluctuation with incentives for enhancing production.
•Government has targeted to increase the share of natural gas in the primary energy mix in India from the current 6.5% to 15% by 2030. The reforms shall help expand the consumption of natural gas and will contribute to the achievement of the target of emission reduction and net zero.
•These reforms are a continuation of the various initiatives taken by the Government of India to protect the interests of consumers by reducing the impact of the increase in international gas prices on gas prices in India by significantly increasing the domestic gas allocation to the City Gas Distribution sector.
•Currently, the domestic gas prices are determined as per the new Domestic Gas Pricing Guidelines, 2014 which were approved by Government in 2014. The 2014 pricing guidelines provided for the declaration of domestic gas prices for a 6 month period based on the volume-weighted prices prevailing at four gas trading hubs - Henry Hub, Albena, National Balancing Point (UK), and Russia for a period of 12 months and a time lag of a quarter.
•As the earlier guidelines based on 4 gas hubs had a significant time lag and very high volatility, the need for this rationalization and reform was felt. The revised guidelines make prices linked to crude, which is a practice now followed in most industry contracts, is more relevant to our consumption basket and has deeper liquidity in global trading markets, on a real-time basis. With the changes now approved, data on Indian Crude basket prices from the previous month would form the basis for APM gas price determination.
[Notification No. L-12015/1/2022-GP-II (E-44157)]
