Lok Sabha Question No. 2690 (UNSTARRED), answered on 2016-03-14
Subject: Formula for Price of Natural Gas
Ministry: PETROLEUM AND NATURAL GAS
Asked by: PRATIMA MONDAL, SUKENDER REDDY GUTHA, SANJAY SHAMRAO DHOTRE, HARISHCHANDRA DEORAM CHAVAN, ELUMALAI VELLAIGOUNDER, KOTHA PRABHAKAR REDDY, JANAK RAM

## LOK SABHA UNSTARRED QUESTION NO. 2690 TO BE ANSWERED ON 14 th  March, 2016

## Formula for Price of Natural Gas

2690: SHRIMATI PRATIMA MONDAL:

SHRI GUTHA SUKENDER REDDY:

SHRI SANJAY DHOTRE:

SHRI HARISHCHANDRA CHAVAN:

SHRI V. ELUMALAI:

SHRI PRABHAKAR REDDY KOTHA:

SHRI JANAK RAM:

## पेट्रोलियम एवं प्राक ृ तिक गैस मंत्री

## Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)  whether  the  Government  has  implemented  Rangarajan  and  Vijay  Kelkar  Committee recommendation to determine the prices of natural gas, if so, the details thereof along with the existing mechanism/ formula for fixing the prices of domestic natural gas for users;
- (b) whether the Government has received requests from domestic gas producers/companies for reviewing the existing mechanism/formula for fixing the prices of domestic gas for end users and if so, the details thereof;
- (c) whether the cases of violation of New Domestic Natural Gas Pricing Guidelines-2014 by the domestic gas producers/companies have come to the notice of the Government in the country and if so, the details thereof, company-wise;
- (d)  whether  the  ONGC  has  requested  the  Government  to  review  the  new  gas  pricing formula in KG basin which is termed as non-viable to carry out its discoveries in KG Basin and if so, the response of the Government thereto;
- (e)  whether  the  Government  proposes  any  roadmap  to  bridge  the  gap  between  the imported price and domestic price of gas particularly when we are importing large quantities of gas and if so, the details thereof; and
- (f) whether the Government proposes to change the existing gas price fixation formula and incentivize the companies operating in deep/ultra-deep and high pressure high temperature water blocks and if so, the details thereof?

## ANSWER

## पेट्रोलियम एवं प्राक ृ तिक गैस मंत्रािय में राज्य मंत्री ( स्विंत्र प्रभार ) ( धमेन्द्र प्रधान )

MINISTER OF STATE (INDEPENDENT CHARGE) IN THE MINISTRY OF PETROLEUM & NATURAL GAS (SHRI DHARMENDRA PRADHAN):

(a)  Rangarajan  and  Kelkar  Committee  have  submitted  their  report  on  various  upstream related  issues  including  pricing  of  domestically  produced  natural  gas.  Government,  after considering  the  issue  comprehensively  has  approved  the  pricing  mechanism  which  was notified  in  the  form  of  New  Domestic  Gas  Pricing  Guidelines,  2014.  The  same  can  be viewed on this Ministry's website-http://www.petroleum.nic.in

(b) Yes, Madam.  After the notification of New Domestic Natural Gas Pricing Guidelines, 2014, some of the producers operating in deep water, ultra deep water and High Pressure High  Temperature  (HPHT)  blocks  have  requested  to  allow  them  freedom  to  sell  gas produced from such fields on market determined prices. They have made such request on the  ground  that  production  of  gas  from  such  field  entails  higher  costs  and  also  involves higher risk.

(c) Some representations have been received by the Government in this regard which are under examination.

(d) Yes, Madam.  ONGC has requested to allow them freedom to sell gas produced from such fields on market determined prices.

(e) Domestic price of natural gas is linked to the prices at major hubs and tries to balance the interests of producers as well as consumers. The price of imported LNG is dependent on crude price (Brent/JCC) as well as demand and supply of LNG in international market.

(f) Considering the requests of the operators and also higher costs associated with such development, Government has decided to grant marketing freedom with a cap on the price to  the  discoveries,  made  in  High  Pressure,  High  Temperature,  Deepwater  &  Ultra Deepwater areas, which are yet to come on commercial production as on 01.01.2016.

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