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Market Linked Price for Gas from New Discoveries: Boosting Deep-Water Exploration in India

The government may allow a part of the natural gas produced by firms like ONGC and Reliance Industries from new discoveries to be sold at market price as it looks to boost domestic exploration and production. New gas discoveries in deep-water, ultra-deep sea or high-temperature and high-pressure fields will be given a premium over and above the approved price. The premium will be in form of allowing a fixed percentage of natural gas produced from difficult fields to be sold at market price and the remaining as per the approved price.


Source:  Economic Times

SNP Insights

Linking some percentage  of total explored gas from geologically difficult field at market driven price, will encourage upstream player to invest more in deep & ultra deep exploration. It will augment the domestic gas exploration significantly. As only some portion of the total exploration will be market linked,hence achieving a optimum price for both the developer & end consumer, so it won’t affect End user like Fertilizer, Power & Cooking gas.