India’s national oil, gas firms likely to get higher prices for gas from ‘difficult’ projects

KOLKATA (miningweekly.com) – India’s Petroleum and Natural Gas Ministry has forwarded a proposal for approval by the Union Cabinet that will more than double the price of natural gas produced by national oil and gas exploration and production (E&P) companies from fields categorised as “difficult”.

However, contrary to demands from national oil and gas majors seeking higher prices for all difficult fields in their portfolio, the new proposal would be limited to only new discoveries and operationalised by these companies, sources said.

Once approved by the Cabinet, the proposal would hike gas prices offered to national E&P companies to $6.30/unit of gas produced from difficult fields, against the prevailing price of $2.89/unit that these companies get from other fields operated by them, the sources added.

Among the biggest beneficiary of the proposed hike in natural gas price would be government-owned and -operated ONGC, which has been aggressive in launching exploratory projects in north-east India under its “hydrocarbon mission 2030 for north-east India”, as most projects in the north-east were expected to be categorised as “difficult”, owing to the region’s geographical location and hilly terrain.

The higher pricing offered to gas produced in this region would be at par to gas produced from deepwater fields operated by ONGC in other parts of the country, the sources said.

In the current year, ONGC has targeted drilling 33 wells in the north-eastern province of Assam against 31 wells drilled last year. In the neighbouring province of Tripura, ONGC has drilled 220 wells, establishing gas reserves of 45-billion cubic metres of which 13-billion cubic metres of reserves have been brought into production.

Given the high potential of gas in Tripura, ONGC aimed to drill at least 22 wells a year over the next three years in Tripura and the expected higher gas price offered would compensate the company for the higher cost of exploration and production in difficult terrains of the north east, the sources said.