Reliance expects natural gas prices from its fields to rise again in October 2022

Reliance Industries Ltd expects prices of natural gas in India to rise again in October as its gas exploration business reaps the rewards of a global surge in energy prices that have already pushed the rates to a record high.

The petrochemical giant expects the price cap for its KG-D6 gas sales to rise over the current $ 9.92 per million British thermal units (mmBtU), Sanjay Roy, senior vice-president for exploration and production, said in an investor call following the announcement of its quarterly earnings last week.

The government sets gas prices every six months based on international rates. The price of gas from old or regulated fields was more than doubled to a record $ 6.1 per mmBtu from April 1 and that for difficult fields like those lying in deepsea to $ 9.92. per mmBtu. Rates are due for a revision in October 2022.

It is anticipated that the price of gas from old fields of state-owned Oil and Natural Gas Corporation (ONGC) will be hiked to about $ 9 per mmBtu and the cap for difficult fields will rise to double digits.

“In fact, we have also seen prices rise, as we know the gas markets are quite tight and prices have been elevated, and that effect we are seeing now in the revenues as well as improved EBITDA margins,” Roy said.

Reliance and its partner bp plc of UK produce about 18 million standard cubic meters per day of gas from two sets of new fields in the eastern offshore deepsea block KG-D6. Higher gas prices have helped the company’s EBITDA (pre-tax profit) from oil and gas exploration and production business to climb to a seven-year high.

Revenue from the segment rose 3.5 times to Rs 7,492 crore in 2021-22 (April 2021 to March 2022) fiscal while EBITDA surged 21 fold to Rs 5,457 crore. Reliance-bp, who commissioned R-Cluster field in December 2020 and Satellite fields in April 2021, are targeting to start production from MJ field in the same block by the end of the year.

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