Government of India plans to hike natural gas prices by 60% for undeveloped gas discoveries for deep-sea, ultra-deep sea and high-temperature & pressure areas

India: For supporting the oil & gas exploration companies, GoI is planning to reduce natural gas prices by 60% for undeveloped gas discoveries in deep-sea, ultra-deep sea and high-temperature & pressure areas. Currently, the natural gas price in India is USD3.82 per million British thermal units and by April 2016, it will reduce to USD3.15 per million British thermal units, which is not enough to incentivise exploration in deep-sea development. As a result, the government is planning to link its price to average of landed price of naphtha, fuel oil and liquefied natural gas (LNG) that leads to the increase in the price of natural gas to around USD6 per million British thermal units at prevailing rates of naphtha, fuel oil and LNG.

TechSci Research depicts that with consistent decrease in the production of natural gas and increasing LNG imports to fill the demand-supply gap, incentivizing the prices of natural gas for deep-sea areas has become a positive approach for reducing the import dependency. Increase in natural gas production will not only benefit the government but also various end-users such as city gas distribution (CGD), power sector, fertilizer sector and industrial sector.

According to released report of TechSci Research “India City Gas Distribution Market Forecast and Opportunities, 2030”, CGD sector is one of the fastest growing end-users of natural gas, which grew exponentially at a CAGR of 21.44% during 2010-14 which is anticipated to grow in the future on account of increasing focus of government towards clean & green fuel and rapid development of CGD in cities across the nation resulting in the increased demand for City Gas Distribution in India.