Sops to unlock ‘unviable’ blocks of ONGC, OIL expected to boost country’s natural gas output
The government plan to offer PSUs special incentives for natural gas discoveries in difficult and unviable areas will help raise India’s natural gas production, as it will unlock output in a dozen fields of state-owned ONGC and OIL, officials said on Sunday.
India currently produces about 90 million standard cubic meters per day (mmscmd) of natural gas and has ambitious plans to double output by 2022 to reduce its reliance on imports and replace some of the polluting liquid fuels to cut emissions.
Speaking on sidelines of A billboard outside the venue of Petrotech 2019 in Greater Noida, UP. The three-day event began on Sunday
the Petrotech conference here on the outskirts of Delhi, officials said ONGC and OIL have a dozen discoveries, which are unviable at current government mandated
gas price. These finds, they said, need a higher price and the government plans for special incentives for them would help bring them to production quickly.
Petroleum Minister Dharmendra pradhan had last month stated “special incentive besides the incentive already provided” will be given to difficult fields of ONGC.
“We dont know what that incentive will be, but we presume it will be a higher and remunerative price,” an official said.
State-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) have not been able to develop the discoveries or bring them to production as the current gas price of $3.36 per million British thermal unit (MMBtu) is way lower than the cost of production.
The officials said the fields can be expeditiously developed and monetised in case pricing and marketing freedom is granted by the government.
ONGC and OIL want a price of over $6 per MMBtu to help them produce the gas without suffering any losses.
In the absence of a viable gas price, they will have to mothball $3-billion projects, the officials said. The NDA government had, in 2014, evolved a new pricing formula using rates prevalent in gas surplus nations like US, Canada and Russia to determine the price in a net importing country.