Millennium Post

Natural gas price to be cut by 10% to $5.02 from Apr 1

The price of domestically produced natural gas is likely to be slashed by over 10 per cent to $5.02 per unit from April 1, the first ever reduction in rates of the fuel.

The move will hit revenues of companies like ONGC and Reliance Industries. The prices of natural gas are due to be revised based on average rates at key international hubs. The new rate will be around $5.02 per million British thermal unit (mmBtu) as compared to the current price of $5.61, mainly because of slump in rates in second half of 2014, sources privy to the development said.

On a gross-calorific value basis, the price will be around $4.67 per mmBtu as compared to $5.05 currently. The BJP-led NDA government had in October 2014 used a new formula to fix price of almost all domestically produced natural gas at $5.61 per mmBtu for the period up to March 31.

The rates were to be revised every six month using average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta (Canada) and Russia with a lag of one quarter.

So, rate for April 1 to September 30 would be based on average price at the international hubs during January to December 2014.
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