Price of natural gas produced from existing fields of state-owned ONGC and Reliance Industries has been cut to USD 3.06 per million British thermal unit with effect from Friday, an oil ministry official said.
The steep downside revision in the price of domestic natural gas by the government at $3.82 per unit for six months from October 1 is set to influence the business decisions of oil exploration and production companies, American ratings services Standard & Poor's said on Sunday.
Reliance Industries may defer development of R-Series and other satellite gas fields in the eastern offshore KG-D6 block if the gas price outlook was uncertain, its junior partner Niko Resources of Canada said.
Reliance Industries and its partner BP plc will nearly triple natural gas production from their eastern offshore KG-D6 block by 2021-22 in anticipation of a 'right' gas price covering their exploration risk.
Hitting back at Rahul Gandhi for his 'suit-boot' government comment, Oil Minister Dharmendra Pradhan Tuesday said the previous UPA regime had approved a gas price of USD 9 for firms like Reliance Industries without bothering about its impact on the common man.
Government may dip into Reliance Industries' incremental gas price hike revenue, accruing in a pool account, to recover its dues in the wake of the contractor failing to meet certain KG-D6 output targets.
Reliance Industries and its partners will get about USD 40 million in additional revenue this fiscal for gas they produce from eastern offshore KG-D6 block after the government raised prices by 33 percent.
Though contents of the report have been kept under wraps, the official indicated that the price increase may be around 50 percent. Most of the domestically produced gas is currently sold at a price of USD 4.2 per mmBtu.