On gross calorific value (GCV) basis, the new gas price for October 1 to March 31 would be Dollars 3.82 per mmBtu as compared to USD 4.66 now, officials said.
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Shares of city gas distribution companies, such as GAIL (India), Indraprastha Gas, Petronet LNG, Gujarat Gas and Gujarat State Petronet gained 0.5-5 per cent after the government slashed natural gas prices by 16 per cent to $4.24 per unit for a six-month period beginning Wednesday.
The new price would not impact Reliance Industries (RIL) as the price the company is allowed to charge from its gas reservoirs in the Eastern offshore KG-D6 block is capped at $4.2 per mmbtu, pending the resolution of arbitration over cost recovery on account of shortfall in production from D1 and D3 discoveries.
The price cut is the second reduction in rates ever – the first being on April 1.
In October a year ago, the government had approved a mechanism for determining the price of domestically produced gas using the weighted average of rates prevalent in gas-surplus economies of the USA / Mexico, Canada and Russian Federation and had set a six-month period for revision of prices based on market rates.
The government had introduced a new gas-pricing formula last November, which linked pricing of locally produced gas with those in the United States, Canada, the United Kingdom and Russian Federation.
Thus, the October 1, 2015 to March 31, 2016 rate announced is based on the average of prices from July 1, 2014 to June 30, 2015. Gas is back within 10 cents of the three-year low closing price it hit April 27, retreating from a brief surge that started the week.
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Thailand prices gas from new projects at $8.2 per mmBtu. On GCV basis, prices went up from $3.79 per unit to $5.05 per unit.
