The Union government has fixed the price of domestic gas at US$1.79 per million British thermal units (mmBtu) effective for six months starting October 1, 2020. This is down by about 25% from US$2.39 per mmBtu applicable to the six month period April 1, 2020 – September 30, 2020. That itself was 25% lower than the price of US$3.23 per mmBtu prevailing during October 1, 2019 – March 31, 2020. The current price is nearly half of what it was 6 month ago. The domestic production of natural gas accounts for about 50% of the total consumption in India of about 175 million standard cubic metres a day (mmscmd), balance 50% comes from other countries and is imported as liquefied...
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Category: Oil & Gas
Uniform transport tariff for gas – a flawed idea
Speaking at the launch of the nation’s maiden online gas trading platform by Indian Gas Exchange (IGX), petroleum minister Dharmendra Pradhan alluded to “a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source.” Petroleum and Natural Gas Regulatory Board (PNGRB) Chairman DK Saraf was even more specific when he spoke of a “single rate across pipelines so as to make the price of fuel uniform for customers across the country.” According to the minister, “the new policy will help bring down the cost of natural gas, make it affordable in every part of the country and facilitate development of...
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Uniform transport tariff for gas – a flawed idea
Speaking at the launch of nation”s maiden online gas trading platform by Indian Gas Exchange (IGX), union minister for petroleum and natural gas (MPNG), Dharmendra Pradhan reiterated the commitment of Modi –government to raise the share of natural gas in the energy basket from existing around 6% to 15% by 2030 in sync with its avowed objective of promoting use of environment friendly fuel. Pradhan also alluded to ‘a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source’. The Chairman, Petroleum and Natural Gas Regulatory Board (PNGRB), Dinesh Kumar Sarraf was more specific when he hinted at ‘single rate...
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Fuel prices are burning
We have an abhorrent situation whereby taxes alone account for about two-third of the price at the pump. The high fuel price contributes to high inflation and higher costs of fertilisers and food During the last three weeks of June, the oil marketing public sector undertakings (PSUs), namely the Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), increased the retail prices of petrol and diesel continuously almost daily. The cumulative hike works out to about Rs 9 per litre of petrol and Rs 11 per litre in case of diesel. As a result, the current price of both the fuels in Delhi is Rs 80.5 per litre. In April/May, petrol was selling at Rs...
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Fuel prices – on the escalator
During the last three weeks or so, the oil marketing public sector undertakings (PSUs) viz. Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have increased the retail price of petrol and diesel continuously almost every day. The cumulative increase works out to about Rs 9 per liter petrol and Rs 11 per liter in case of diesel. As a consequence, the current price of both the fuels in Delhi is about Rs 80.5 per liter. In April/May, petrol was selling at Rs 71 per liter whereas diesel price was Rs 69 per litre. The prices of petrol and diesel are deregulated [petrol since June 2010 and diesel since October 2014]. The oil...
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Oil and gas – don’t fiddle with formula-based pricing
India depends on imports for about 83% of its crude oil and 50% of gas requirement. Considering the huge quantities involved, the price at which these products are imported has a potent effect on the health of the economy by impacting the twin deficits viz. current account deficit [CAD] and the fiscal deficit [FD] and other related parameters such as inflation, interest rate, borrowing cost etc. Therefore, all stakeholders including the government – both Centre and states – always pray for reduction in their prices. The steep reduction price of crude from over US$ 70 per barrel at the start of 2020 to around US$ 35 per barrel currently [on April 22, it even went below US$ 20 per barrel] and...
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Hike in oil duties – a retrograde move
In the wake of widespread destruction of demand triggered by Covid – 19, the international price of crude has plummeted to a low of about US$ 20 per barrel despite a historic agreement between OPEC and non-OPEC suppliers on April 10, 2020 to cut production by 10 million barrels per day [mbpd] – as demand destruction [about 29 mbpd] far exceeds the cut in supply resulting a huge glut. De jure, the prices of petrol and diesel are deregulated [this was done: petrol in June 2010 and diesel in October 2014]. The oil marketing companies are expected to adjust the price in line with movement in their international price. Now, that the international price of crude has declined [albeit steeply],...
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What India should do when oil prices have crashed
With crude price low, the govt should think of moving completely to DBT for food, fertiliser and power. Crude oil plummeted to less than US$ 30 per barrel – drop of 50% over its level in the beginning of 2020. ————————————————————— Much before Covid 19 had assumed monstrous dimensions, the international crude oil market was already oversupplied. Then, OPEC and non-OPEC suppliers failed to reach an agreement as Russia refused to back even a moderate cut. In sync with its past behaviour under similar circumstances (1997, 2015), Saudi Arabia pumped additional supplies prompting tit-for-tat by Russia. As a result, crude oil plummeted to less than US $30 per barrel – drop of 50% over its level in the beginning of...
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Detoxify oil pricing
The COVID-19 outbreak is a rare event and oil exporters may think that after this ends they can continue to extract a higher price from importing countries. This is flawed thinking On October 15, 2018, while interacting with global leaders from the energy sector in New Delhi, Prime Minister Narendra Modi had expressed concern over the steep increase in the international prices of crude oil (at $80 per barrel leading to corresponding increase in price of diesel and petrol) and had urged all leading producers/exporters to be more responsible in fixing the price, to bring it down to a reasonable level. At that time, no one had even contemplated a scenario wherein the price of crude would plunge to a fraction of...
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Detoxify oil pricing
On October 15, 2018, interacting with global leaders from the energy sector in New Delhi, prime minister, Narendra Modi had expressed concern over the steep increase in the international price of crude oil [then the price had touched US$ 80 per barrel leading to corresponding increase in price of diesel and petrol; this even hurt BJP politically as the party lost three state assembly elections viz Madhya Pradesh, Rajasthan and Chattisgarh] and urged all leading producers/exporters to be more responsible in fixing the price to bring it down from current high to reasonable level. Then, he might not have even contemplated of a scenario wherein the price of crude would plunge to a fraction of the October 2018 level; on...
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