Domestic gas prices reach 2-year high, CNG and PNG will be expensive

Equity Tips | MCX Free Tips

The government has increased prices of natural gas by 6% to $ 3.06 per MMBTU. With this, natural gas prices have reached the highest level of two years in the country. The impact of this decision can be seen as an increase in prices of CNG and cooking gas. It will also have an effect on gas-based power generation, which can see an increase in electricity prices.

Equity Tips

Will apply from April 1, new prices

, most will be domestic fields radiated Natural gas prices British $ 3.06 per million from April 1, thermal unit (mmBtu), according to Oil a notification issued by the Ministry of Petroleum Planning and Analysis Cell, which is currently 2.89 The dollar is This increase will be applicable for 6 months.

Prices vary every 6 months Prices of

natural gas are fixed every 6 months on the basis of average rates in countries with U.S., Russia and Canada, such as gas surplus. India imports almost half of its gas requirement, whose prices have doubled in comparison to the domestic rate. 

This is the second increase, and it will be the highest level since April-September 2016, when the cost of this product was almost the same for the domestic producers.

 Oil and Natural Gas Corp (ONGC) and Reliance Industries Ltd will increase the earnings of ONGC and RIL due to increase in price, but the prices of CNG and piped cooking gas will increase. The natural gas is used as input. 

Apart from this, the government's prices of gas from remote areas like deep sea, extremely deep water, high temperature and high pressure fields have been reduced to $ 6.78 per mBtu, while at present the price is $ 6.30.

CNG and PNG will be expensive

due to this increase, cost of Domestic Gas Based Power Generation will increase by 3 per cent. Simultaneously, the prices of CNG and piped cooking gas will increase by 50-55 paise and 35-40 paise per cubic meter of cubic meter respectively. 

However, the revenues of gas producers like ONGC will increase. On the increase in gas prices by $ 1, the revenues of the government company increase by Rs 4,000 crore annually. ONGC is the largest gas producer in the country, which has a 70 per cent share in 9 million standard cubic meters per day of current output. 

Formula was fixed in 2014

Along with ONGC, Oil India and Private Sector Regulator RIL's gas from KG-D6 block is sold on the basis of fixed formula in October 2014. However, gas emissions from Panna / Mukta and Fields like Western Offshore and Rawa of Bengal Bay in Tapti are not within the purview of this formula.

The increase was three years later 

, the gas price for the last October, 2017 to March 2018 was increased to 2.89 per MMBTU, while in the last 6 months the prices were $ 2.48. This was the first increase in almost three years.

Read Also:-  Equity Tips For Today’s Market