India’s natural gas production increased by 4.2 per cent to 2.87 billion cubic meters (bcm) in December 2018 over a year ago.
Natural gas production by ONGC alone during the month stood at 2.20 bcm, which is 9.81 per cent higher when compared with December 2017. But Oil India Limited (OIL) produced 0.23 bcm only which is 1.82 per cent lower than December 2017 during the month.
Natural gas production by private and joint venture projects was 0.44 bcm, which is 14.94 per cent lower when compared with December 2017.
Meanwhile, natural gas output fell 0.2 per cent to 24.65 bcm in April-December 2018 over April-December 2017.
It should be recalled that in October last year, the government of India had announced a 10 per cent hike in price of domestic natural gas, a move that translated into higher CNG price and increased cost of electricity and urea production.
Price paid to most of the domestic producers of natural gas had been hiked to USD 3.36 per million British thermal unit (mmBtu) from October 1, 2018 from the current USD 3.06, according to Oil Ministry’s Petroleum Planning and Analysis Cell.
Natural gas prices are set every six months based on average rates in gas-surplus nations like the US, Russia and Canada.
India imports half of its gas which costs more than double the domestic rate.
The USD 3.36 per mmBtu rate would be for six months beginning October 1 and will be the highest since October 2015 to March 2016 when USD 3.82 per mmBtu price was paid to domestic producers.
The increase in price has boosted earnings of producers like Oil and Natural Gas Corp (ONGC) and Reliance Industries but has also led to a rise in price of CNG, which uses natural gas as input. It would also lead to higher cost of urea and power production.
Gas price was last hiked to USD 3.06 per mmBtu for April-September 2018 from USD 2.89 in the previous six months. This was just the second hike in nearly three years.