India raises Apr-Sep natural gas price by 5.9% to $3.06/MMBtu
India has raised its domestic natural gas price by 5.9% to $3.06/MMBtu for the six-month period beginning April 1, the oil ministry said Tuesday.
The move could help boost upstream investment and maintain the competitiveness of LNG imports in the domestic downstream markets, but could affect downstream demand growth at a time when India seems determined to more than double the share of gas in its energy mix.
The hike will increase the cost of piped natural gas for cooking and compressed natural gas for transport, two key gas demand growth markets, supported by oil-to-gas fuel switching. It will also result in increased costs for urea and power production.
The price rise is in line with expectations of higher global benchmark prices, including crude oil and Henry Hub, an index used to price the recently started LNG contract between US-based Cheniere Energy and Indian utility Gail. The latest price hike follows one in October 2017, when the government raised the gas price 16.5% to $2.89/MMBtu for October-March.
In 2014, Prime Minister Narendra Modi’s government introduced a new gas pricing formula based on prevailing rates in gas-surplus nations such as the US, Canada, and Russia to price domestic gas.
The cost of natural gas from India’s flagship Krishna-Godavari basin is in the range of $4.99-$7.30/MMBtu, while for other basins, the cost varies between $3.80 and $6.59/MMBtu, according to the oil ministry’s latest update.