Prices of natural gas likely to rise to record level this week

The government sets gas prices every six months — on April 1 and October 1 — each year based on rates prevalent in gas surplus nations

NEW DELHI: Prices of natural gas, which is used to generate electricity, make fertiliser and is converted into CNG to run automobiles, is likely to rise to record levels at the rate review scheduled this week, sources said. The government-dictated price for natural gas produced in the country is to be revised on October 1.

After factoring in the spike in energy prices witnessed in recent months, the rate paid for gas produced from old fields such as of state-owned Oil and Natural Gas Corporation (ONGC) is likely to rise to $9 per million British thermal units from current $6.1.

Simultaneously, difficult fields like the ones in Reliance Industries Ltd and its partner bp plc operated D6 block in KG basin, are likely to get around $12 mmBtu compared to the current rate of $9.92, two sources aware of the matter said.

These are the highest rates for administered/regulated fields (like ONGC’s Bassein field off the Mumbai coast) and free-market areas (such as the KG basin). Also, this will be the third increase in rates since April 2019, and comes on the back of firming benchmark international prices.