The Empowered Group of Ministers (EGoM) which is looking into the issue of natural gas pricing and allocation may meet soon to consider the recommendation of Rangarajan Committee on the issue.
It may be noted that the finance, power and fertiliser ministries as well as gas producers are opposed to the formula suggested by the committee, which would result in doubling the gas price.
For example, Cairn India and Gujarat State Petroleum Corporation (GSPC), who produce natural gas, are seeking a price of over $8.5 per mBtu.
Reliance Industries (RIL), which sells gas produced from the KG-D6 block in the country’s east coast at $4.2 per million British thermal unit (mmBtu), seeks upward revision in the price in order to invest further in the asset.
The company feels that its planned investments that run into billions would be unviable at the current level of gas price. The contractors – RIL (operator), BP, and Niko Resources – under the KG-D6 block enhancement plan are looking to invest over $5 billion in the next three to five years in a series of projects to develop around 4 trillion cubic feet (tcf) of discovered natural gas resources in the block.
For the investment to become viable, the contractors are seeking a market price (over $10 per mmBtu) for D6 gas, which is up for review by The Empowered Group of Ministers (EGoM).