Pricing Formation worldwide is based out of gas on gas pricing formation and oil price indexing for long term contracts, the scenario is changing now. Near about one third volume of gas worldwide is being priced on gas on gas that is market based and similar amount being regulation below cost. India on the other hand employs different mechanism for gas pricing and there is no standard. The current hike, however will be applicable to all sources of gas. Will it be a right step forward or not? Only time will judge. Concerns remain about the motive of the government which speaks in double tone. This price would be applicable to gas producers but there is no clear indication on how to treat gas consumers who are price averse always.
Stakeholders are confused at this stage amid contradicting statements from different ministries . This is the time India should ponder about its gas pricing strategy and should look for coming up with some set standards and benchmarks to do gas pricing in India taking into all other sources such as LNG,CBM and shale gas options both from domestic sources and international sources. The sourcing and development of these futuristic options would decide the future course of gas pricing in India.
ENINCON with its price factor benchmarking report would evaluate all options available considering the Indian factors and dig deep into the LNG,CBM and shale gas options available to come up with price benchmarks for Indian Scenario.
Key Queries Resolved
- What would be the top-line and bottom line impact of gas price hike?
- How would the gas price hike change the investment in E&P activity?
- What would gas price hike imply for the gas transporting agencies like GAIL?
- What prompts the Government to take this decision at this stage?
- When will India have its gas pricing bench marking to international standard?
- What will be India’s role in international gas trading in medium to long term scenario?
- What would be the financial burden on consuming sectors?
- Whether Power industry would absorb such an increase?
- What would be the possible increase in CGD prices?
- What would be the gain in terms of royalty and profit petroleum?
- What will be the subsidy outgo?
- What will be the tariff increase per unit for discoms?
- How would it impact LNG trading to India and its associated infrastructure?
- Will there be drastically reduction in LNG imports?
- How would it affect cross country pipeline projects for India?