The Ministry of Petroleum and Natural Gas has announced a new pricing policy for gas produced from new wells or well interventions in nominated fields of ONGC/Oil India Limited (OIL). Under the new policy, this gas will be priced at a 20 percent premium over the APM (Administrative Price Mechanism) price.
According to domestic gas pricing guidelines, the price of domestic natural gas (APM price) is set at 10 percent of the Indian Crude basket price, as per the monthly announcements by Petroleum Planning and Analysis Cell (PPAC).
The guidelines specify that gas from new wells or well interventions in ONGC/OIL’s nominated fields will be priced at a 20 percent premium over the APM price, resulting in a total price of 12 percent of the Indian Crude basket price for this new gas.
The Directorate General of Hydrocarbons (DGH) was tasked with working out the details for this pricing adjustment, which has now received approval from the Ministry of Petroleum and Natural Gas (MOP&NG).
The ministry stated that this enhanced pricing for new gas will make development projects more viable and help ONGC increase natural gas production from challenging areas that require substantial investment and advanced technology. Additionally, it will boost the company’s investment capacity for undertaking capital-intensive projects that involve higher risks and require appropriate pricing.
Recently, ONGC’s board approved the Daman Upside Development project in the Mumbai High field at a cost of Rs 7,800 crore, aiming to increase domestic gas production with a peak output projected at around 5 MMSCMD. The contract for this project has already been awarded.
The board also approved the Integrated Development of four Contract areas under DSF-II at a project cost of Rs 6,000 crore, with an expected peak production of approximately 4 MMSCMD of gas. The central government has granted pricing and marketing freedom for this project under the DSF Policy, and the execution contract has been awarded.
This policy decision supports the national goal of increasing the share of natural gas in India’s energy mix from 6 percent to 15 percent by 2030.
(With inputs from ANI)
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