NEW DELHI: India’s high oil and gasoline producer ONGC on Friday mentioned it’s dropping Rs 6,000-7,000 crore on pure gasoline enterprise after the government-mandated rates for the gas dropped to a decade low.
The federal government-mandated charges are method under the price of manufacturing of $3.5-3.7 per million British thermal unit, Oil and Pure Gasoline Corp (ONGC) director (Finance) Subhash Kumar mentioned.
Each greenback discount in gasoline value results in a income lack of about Rs 5,200 crore and a Rs 3,500 crore on revenue.
“Our losses shall be within the order of Rs 6,000-7,000 crore in present fiscal,” he mentioned.
ONGC has been incurring losses on the 65 million commonplace cubic meters per day of gasoline it produces from home fields after the federal government in November 2014 launched a brand new gasoline pricing system that had “inherent limitations” because it was based mostly on pricing hubs of gasoline surplus international locations such because the US, Canada, and Russia.
The value, in line with this system, is revised twice a yr and the speed for the interval starting October 1 has been reduce by 25 per cent to $1.79 per mmBtu.
He, nonetheless, hoped the federal government will act on the agency’s request and a flooring value could be set to examine losses.
ONGC chairman and managing director Shashi Shanker mentioned the present gasoline value doesn’t cowl price and the corporate has made representations to the Ministry of Petroleum and Pure Gasoline for appropriate amendments to the system.
“Ministry is seized of the matter. They’re favourably inclined and a committee has been constituted to look into this,” he mentioned.
Costs need to be remunerative if the home output needs to be raised, he mentioned.
“There’s discuss of a flooring value and modifications within the system itself by linking the speed to related market benchmarks corresponding to JKM. I can not touch upon what form it is going to take however we’re definitely hopeful,” he mentioned.
Whereas the $1.79 per mmBtu fee applies to gasoline produced from fields given to the corporate on a nomination foundation, ONGC has pricing freedom on blocks or areas it had gained in auctions since 1999.
Shanker mentioned the advertising and marketing freedom granted by the federal government earlier this week would assist monetise gasoline discoveries in such blocks.
The brand new coverage permits associates to bid for the gasoline to be produced from such blocks. ONGC group firms, which have been utilizing imported LNG as gas, would now have the ability to take part within the value discovery auctions, he mentioned.
This may create competitors and assist realise higher costs for ONGC. The group firms would additionally save by changing imported gas with domestically produced gasoline, he mentioned.
Most of ONGC’s present manufacturing is from nomination fields and the corporate is hoping so as to add 15 million commonplace cubic meters of output from KG basin utilizing the pricing freedom it has.
Charges in line with the present system are revised each six months. Costs efficient October 1 have been reduce to USD 1.79 per mmBtu. This value is the bottom that ONGC bought since 2010 when the federal government had moved in the direction of deregulating gasoline pricing.
In Could 2010, the Cupboard had accepted an oil ministry proposal to lift the speed of gasoline offered to energy and fertilizer corporations from $1.79 per mmBtu to $4.20 per mmBtu.
The present system takes into consideration the volume-weighted annual common of the costs prevailing in Henry Hub (US), Nationwide Balancing Level (the UK), Alberta (Canada), and Russia with a lag of one-quarter.
Costs are set on April 1 and October 1 every year.
Oil minister Dharmendra Pradhan, in a written reply to a query within the Lok Sabha on March 20, 2017, had acknowledged that the price of manufacturing of pure gasoline within the prolific Krishna Godavari basin is between $4.99 -7.30 per mmBtu. The identical for different basins is within the vary of $3.80 -6.59 per mmBtu, he had mentioned.

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