Industry body calls for a relook at the gas pricing formula
Updated: Oct 09, 2015 02:23:29pm
New Delhi, Oct 9 (KNN) Industry organisation FICCI has advocated a gas pricing mechanism which adequately remunerates domestic exploration and production activity, and ramps up India’s domestic gas supply volumes.
A pricing regime should be reflective of the enormous geological risks and production uncertainties which are inherent in geography such as India, it said.
In a letter to Secretary, Ministry of Petroleum and Natural Gas, Kapil Dev Tripathi, the industry body has insisted that the current gas pricing formula be relooked, as it is unfairly biased towards the pricing in gas surplus economies such as United States, Canada and Russia and is not consistent with realities of the Indian market.
This view has also been corroborated by rating agencies Standard & Poor and Moody’s which have recommended that the pricing formula incorporate prices in similar geographies such as Indonesia and Thailand which average around USD 8-10/mmbtu.
Secretary General, FICCI, Didar Singh has emphasised that India’s vast untapped reserves in deepwater, ultra-deepwater as well as North East and frontier basins can only be brought online by creating a favourable pricing regime which incentivizes both domestic and foreign oil and gas majors to commit significant amounts of risk capital and advanced engineering solutions in these areas.
He added that the higher premium for deepwater, ultra-deepwater along with high pressure and high temperature fields, as previously announced by the government needs to be implemented expeditiously.
Continuing with the current gas pricing regime will severely affect India’s larger goal of reducing oil import dependency and building the domestic hydrocarbon capacity as envisaged in Prime Minister’s “Make in India” initiative. (KNN Bureau)
A pricing regime should be reflective of the enormous geological risks and production uncertainties which are inherent in geography such as India, it said.
In a letter to Secretary, Ministry of Petroleum and Natural Gas, Kapil Dev Tripathi, the industry body has insisted that the current gas pricing formula be relooked, as it is unfairly biased towards the pricing in gas surplus economies such as United States, Canada and Russia and is not consistent with realities of the Indian market.
This view has also been corroborated by rating agencies Standard & Poor and Moody’s which have recommended that the pricing formula incorporate prices in similar geographies such as Indonesia and Thailand which average around USD 8-10/mmbtu.
Secretary General, FICCI, Didar Singh has emphasised that India’s vast untapped reserves in deepwater, ultra-deepwater as well as North East and frontier basins can only be brought online by creating a favourable pricing regime which incentivizes both domestic and foreign oil and gas majors to commit significant amounts of risk capital and advanced engineering solutions in these areas.
He added that the higher premium for deepwater, ultra-deepwater along with high pressure and high temperature fields, as previously announced by the government needs to be implemented expeditiously.
Continuing with the current gas pricing regime will severely affect India’s larger goal of reducing oil import dependency and building the domestic hydrocarbon capacity as envisaged in Prime Minister’s “Make in India” initiative. (KNN Bureau)
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