India keeps domestic gas prices on hold for now

NEW DELHI (Reuters) – India will provisionally keep the price of locally produced gas from old fields at $8.57 per million metric British thermal units (mmBtu), the government said on Friday, while it considers a potential change to the pricing formula.

Under the existing formula, the price was due to go up for April-September, but to ensure fair prices for consumers and that inflation is kept in check the federal government last year set up a panel to review it.

The panel suggested the monthly price of gas from old blocks be fixed at 10% of the monthly average of the Indian crude basket, with a cap of $6.5/mmBtu and a floor price of $4/mmBtu.

The cabinet is expected to consider the recommendation soon.

Keeping gas prices at the current level could hit the earnings of producers such as government-run Oil and Natural Gas Corp. (ONGC) and Oil India Ltd.

Over 80% of India’s yearly gas output of 91 billion cubic metres comes from old fields owned by ONGC and Oil India.

India currently links prices of locally produced gas from old fields to a formula tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas. It revises prices twice in a year, in April and October.

“US$ 8.57/MMBTU on Gross Calorific Value (GCV) basis, will continue to be applicable on a provisional basis beyond 31st March 2023, till further order,” the government said in a statement.

However, it added it had lowered the ceiling price of domestic natural gas from difficult fields for April-September to $12.12 per mmBtu from $12.46 per mmBtu.

(Reporting by Nidhi Verma and Shivam Parel; Editing by Mark Potter)