Prices for natural gas produced from the legacy fields of ONGC and Oil India are controlled by the government, which introduced a price band of $4-6.5 per mmbtu for such output in April. The government allocates entire output from these legacy fields to different industries based on a priority ladder it has set.
The new policy also allows producers to receive a 20% premium over the regular price for the volume produced on top of the regular output from these fields. ONGC has suggested the government allow it to use this additional volume in-house, by its petrochemical unit ONGC Petro Additions Ltd (OPAL). If the proposal goes through, it will bring down the cost of gas for OPAL, lower than the rate of imported liquefied natural gas, Pomila Jaspal, director (finance), ONGC told ET. The petroleum and natural gas ministry is “positive” about the proposal, which will require an approval from the Union cabinet, she said.