India: Cabinet Approves Reforms In Natural Gas Marketing

The Indian Government has approved a standardised bidding process for the marketing of natural gas.

The move is part of effort of the Indian government to bring reforms in natural gas marketing.

Per the reforms producing company cannot participate in the bidding process. However, its affiliate companies can participate in the bidding process.

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Speaking to the journalists, Union Petroleum Minister Dharmendra Pradhan said that the Directorate General of Hydrocarbons (DGH) will suggest an e-bidding platform for users.

He noted that producers will have a choice to opt for a platform adding that there process will be transparent and open bidding process to be conducted for price discovery.

The regulator will also suggest a panel of e-bidding platforms to the producers.

Gas producers will have a choice to opt for a platform and get the best market determined price for their gas.

With the changes in gas pricing regime, government hopes that its objective of developing a gas-based economy will get the necessary push.

Pradhan said the changes will also help increase domestic gas production by an additional 40 million standard cubic meters a day (mmscmd), from the current 84 mmscmd.

Government has already given marketing and pricing freedom for gas from blocks awarded under the Discovered Small Field Policy (DSF), Hydrocarbon Exploration and Licensing Policy (HELP) and Coal Bed Methane (CBM) contracts, and discoveries from difficult fields such as deep water, ultra-deep water and high pressure-high temperature areas.

The new changes approved by the Cabinet will allow gas from all such fields to discover pricing under a common e-bidding platform.

While allowing reforms in pricing, the government has left the existing production of gas from nomination fields untouched.

Accordingly, such gas blocks would continue to be guided by a 2014 government-set formula that takes average rates from global trading hubs to determine domestic prices twice a year – in April and then in October.

Under this formula, the current gas price is at $1.79 per million metric British thermal unit (mmBtu) for the six-month period beginning October 1. Gas producers have been critical of this low pricing that adversely impacts investments in the upstream sector.

Source:www.energynewsafrica.com