India’s domestic natural gas output up by 20% in December 2021

India’s domestic natural gas production increased 19.5% to 2,896.7 million standard cubic metre (mscm) in December 2021 on a year-on-year (Y-o-Y) basis, mainly due to higher production from Reliance Industries (RIL) and BP’s ultra-deep-water field in the KG-D6 Block of the Krishna Godavari basin on the east coast.

The output had fallen 8.1% Y-o-Y to 28,670.6 mscm in FY21 but has subsequently increased 21.5% Y-o-Y to 25,673.9 mscm in the April-December period of the ongoing fiscal. The production also commenced on August 31 from state-run Oil and Natural Gas Corporation’s (ONGC) U1B deep-water gas well located in KG-DWN 98/2 block, which has an estimated peak production of 1.2 million standard cubic meter per day (mscmd).

The rise in domestic production coincided with a substantial jump in international liquefied natural gas (LNG) prices, resulting in import dependency of natural gas reducing from 55.3% in April-November, 2020 to 47.1% in the corresponding period in 2021. In the first eight months of the fiscal, LNG import volumes fell 2.6% on a Y-o-Y basis to 21,854 mscm. However, the value of imports in the same time frame increased 65.9% YoY to $7.8 billion. Asian spot LNG rates ranged between $30-35/mBtu throughout December, at one point touching the peak of $49.4/mBtu.

The 2.5 million tonne of crude oil produced in the country during December was 1.8% lower than the production in the year-ago period. Around 85% of the country’s crude oil requirement has to be imported. During December, the price of the Indian basket of crude varied between $77 and $77 per barrel. The average crude oil price in October was $80.6 per barrel.

The Union government has raised the price of domestically produced gas under administered price mechanism by 62% to $2.9/mbtu, effective for six months starting October 1. The ceiling price for gas produced from the difficult fields, such as RIL-BP and ONGC blocks off the east coast, was also raised by 69% to $6.13/mbtu.

Leave a Reply

Your email address will not be published.