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Experts suggest govt to liberalise pricing regime

Experts suggest govt to liberalise pricing regime
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Experts opine that the government must incentivise private companies to produce more natural gas by giving them freedom to fix market-linked price for the fuel.

The liberal pricing regime in the US allowed companies to invest in new technologies in the oil and gas sector. The abundance of shale rocks in the American continent translated into such a huge supply of natural gas that prices crashed below $2.

If the US could achieve this, there is no reason why India cannot offer more incentives for energy companies to change the gas landscape of the country — to make the resource abundant and reasonably priced, experts feel.

In the US, exploration companies saw a huge incentive in deploying risk capital in oil and gas exploration as well as developing new sources like extracting natural gas trapped in shale rock formations.

Industry observers feel that India’s gas production has almost stagnated for a decade, barring the surge owing to new production from Reliance’s D-6 block, because of restrictive pricing policy.

Consequently, the country’s LNG imports spiked from barely a quarter of a tonne in 2003-04 to more than 10 million tonne in 2011-12.

India has abundant gas reserves but these are located in deep-sea fields, which throw enormous technological and extraction challenges like very high temperature and pressure.

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