In boost to ONGC & Reliance, gas price to be hiked by 10% US trying to bully India, others against buying Venezuelan oil

Price of natural gas domestically produced from difficult fields will rise to about $9 per mmbtu from current $7.67... This will be 4th straight increase in gas prices

NEW DELHI: In a boost to firms like ONGC and Reliance Industries, the government is likely to raise the price of domestically produced natural gas by over 10 per cent to over $3.72 per million British thermal unit with effect from April 1, sources in know of the development said.

The price of gas produced from difficult fields will rise to about $9 per million British thermal unit (mmbtu) from current $7.67, they said.

This will be the fourth straight increase in gas prices.

Natural gas prices are set every six months - on April 1 and October 1 every year based on average rates in gassurplus nations like the US, Russia and Canada.

The rate is calculated by taking a weighted average price at Henry Hub of the US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter.

So for April 1 to September 30, period, the average rates prevailing during January 1, 2018, to December 1, 2018, would be taken. Sources said, the rates for 2018 are known and based on it the rise from April 1 comes to 10 per cent.

The increase in price will boost earnings of producers like Oil and Natural Gas Corp (ONGC) and Reliance Industries but will also lead to a rise in price of CNG, which uses natural gas as input. It would also lead to higher cost of natural gas piped to households (PNG) for cooking purposes as well as of feedstock cost for manufacturing of fertilisers and petrochemicals.

The hike will boost produc- ers like ONGC. Every dollar increase in gas price results in Rs 4,000 crore additional revenue for the PSU on an annual basis, sources said adding ONGC is the country's biggest gas producer, accounting for two-thirds of the over 70 million standard cubic meters per day current output.

The $3.72 per mmbtu price will be the highest since October 2015 to March 2016.

India imports half of its gas which costs more than double the domestic rate.

Natural gas prices were last hiked on October 1, 2018, by 10 per cent when rates moved up to $3.36 per mmbtu from $3.06.

The increase will translate into a higher cap price based on alternate fuels for undeveloped gas finds in difficult areas like deep sea, which are unviable to develop as per the existing pricing formula.

The price for such fields from April 1 would be about $9 per mmbtu for six month beginning April 1 as compared to $7.67 currently, sources said.

All of its gas, as well as that of Oil India and private sector RIL'S KG-D6 block, are sold at the formula approved in October 2014. This formula, however, does not cover gas from fields like Panna/mukta and Tapti in western offshore and Ravva in the Bay of Bengal. WASHINGTON DC: America's tough-talking National Security Adviser John Bolton has warned countries, including India, against buying Venezuelan oil, saying nations and firms that support the embattled President Nicolas Maduro's "theft" will "not be forgotten".

Bolton's warning through a tweet on Tuesday came a day after Venezuelan Oil Minister and President of the Latin American state-run oil company PDVSA Manuel Quevedo told reporters in Greater Noida that his sanctions-hit country wants to sell more crude oil to India.

The US has slapped sweeping sanctions on PDVSA with a view to curb Venezuela's crude exports and put pressure on socialist President Maduro to step down.

"We have a good relationship with India and we want to continue this relationship. The relationships with India will continue, the trade will continue and we will simply expand all the trade and relationship," Quevedo told reporters on the sidelines of the Petrotech conference in Greater Noida.

Venezuela is the third largest supplier of oil to India which is the world's third-biggest oil consumer.

Reacting to Quevedo's India visit, Bolton said that "Nations and firms that support Maduro's theft of Venezuelan resources will not be forgotten".

"The United States will continue to use all of its powers to preserve the Venezuelan people's assets and we encourage all nations to work together to do the same," he tweeted and shared a news story about Quevedo's visit to India to sell more crude oil.

Venezuela produces around 1.57 million barrels of oil per day, half of what it produced two decades back.

With the US stopping imports from Venezuela, PDVSA is seeking to retain buyers in other big consuming countries such as China and India.

Quevedo, who now holds the rotating presidency of the Organization of the Petroleum Exporting Countries (OPEC), said on Monday that it was important to listen to all the consuming countries that represent oil demand to maintain the balance of demand and supply in the markets.

"India certainly has a good and healthy relationship with us and all the members of the OPEC and that will continue. So, we always keep these communications and relations with all-consuming countries in order to ensure stability and balance will continue," he said.

The US has caused a loss of about $20 billion to Venezuela's oil revenue-dependent economy, he added.

The Latin American country has the world's largest known reserves of oil estimated at more than 300 billion barrels - bigger than Saudi Arabia's 266 billion barrels.

President Maduro has called Donald Trump's government a "gang of extremists" and blamed the US for his country's crisis.

He is under growing internal and international pressure to call early presidential elections amid a worsening economic crisis and accusations of widespread corruption and human rights violations.

Relations between the US and Venezuela were already fraught before President Trump's administration became one of the first to back opposition leader Juan Guaido as interim President.

Venezuela broke off diplomatic relations in response while Trump said the use of military force remained "an option".

India has refused to go along with the US and recognise Guaido as the President and stop dealing with Maduro's administration.

"India and Venezuela enjoy close and cordial relations. We are of the view that it is for the people of Venezuela to find political solutions to resolve their differences through constructive dialogue and discussion without resorting to violence," External Affairs Ministry spokesperson Raveesh Kumar said last month. Three million people, or 10 per cent of the population, have left Venezuela since its economy started to worsen in 2014, according to the UN.

Guaido says more than 300,000 Venezuelans are at "risk of dying".

Maduro, who has blamed US sanctions for Venezuela's economic woes, said the US intended to "create a humanitarian crisis in order to justify a military intervention".

Maduro was re-elected to the top post in 2018 in an election which was not participated by most of the opposition parties