14% drop likely in KG-D6 natural gas price

The price of natural gas produced from difficult areas like KG-D6 of Reliance Industries (RIL) is likely to be cut by about 14 per cent from next month in line with softening energy prices, sources said.

For the six-month period starting October 1, the price of gas from deepsea and high-pressure, high-temperature (HPTP) areas is likely to be cut to around $10.4 per million British thermal unit (mBtu) from the current $12.12, they said.

The government bi-annually fixes prices of the locally-produced natural gas, which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers. Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deepsea. Rates are fixed on April 1 and October 1 each year. In April this year, the formula governing legacy fields was changed and indexed to 10 per cent of the prevailing Brent crude oil price.