Oil Minister M Veerappa Moily has said that the government’s move for doubling of natural gas prices will halve the demand of gas in the country. At present, most of the domestically produced gas is sold at $4.2 per million British thermal unit (mmBtu) and delivered up to price $6.5, which generates an additional demand of 204 million standard cubic metres per day (mmscmd) over and above present consumption of 145.7 mmscmd.
Moily, quoting a recent study on the gas sector, said that total gas demand would increase to around 260-350 mmscmd, if delivered gas prices continue at $5.8-6.5 per mmBtu. By adding further he said that in case the prices rises to $10-12 per mmBtu, potential domestic gas demand would be lower at around 180 mmscmd, generating additional demand of only 72 mmscmd, whereas at prices above $12 and up to $18 per mmBtu, the potential demand would be limited to 38 mmscmd only. High natural gas prices would neither benefit the buyers nor the producers/suppliers and there is no doubt that high prices would drift the demand away from LNG to other competing fuels. At present, the share of natural gas in the total energy consumption in the country is at 11 percent, which is expected to increase 20 percent by 2025.
As per the study commissioned by the Petroleum and Natural Gas Regulatory Board (PNGRB), domestic gas production, which was 101.1 mmscmd in 2012-13, is projected to rise to 156.7 mmscmd in 2016-17 and to 182 mmscmd in 2021-22 on back of desired policy support and correct pricing signals.
Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG, which will translate into a price of $8.4 per mmBtu, while, the delivered price will be over $10 mmBtu. However, the gas price hike has been opposed by user industries and a petition has also been filed in the Supreme Court saying that rate increase will benefit only a single corporate.
Moily, quoting a recent study on the gas sector, said that total gas demand would increase to around 260-350 mmscmd, if delivered gas prices continue at $5.8-6.5 per mmBtu. By adding further he said that in case the prices rises to $10-12 per mmBtu, potential domestic gas demand would be lower at around 180 mmscmd, generating additional demand of only 72 mmscmd, whereas at prices above $12 and up to $18 per mmBtu, the potential demand would be limited to 38 mmscmd only. High natural gas prices would neither benefit the buyers nor the producers/suppliers and there is no doubt that high prices would drift the demand away from LNG to other competing fuels. At present, the share of natural gas in the total energy consumption in the country is at 11 percent, which is expected to increase 20 percent by 2025.
As per the study commissioned by the Petroleum and Natural Gas Regulatory Board (PNGRB), domestic gas production, which was 101.1 mmscmd in 2012-13, is projected to rise to 156.7 mmscmd in 2016-17 and to 182 mmscmd in 2021-22 on back of desired policy support and correct pricing signals.
Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG, which will translate into a price of $8.4 per mmBtu, while, the delivered price will be over $10 mmBtu. However, the gas price hike has been opposed by user industries and a petition has also been filed in the Supreme Court saying that rate increase will benefit only a single corporate.
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