Press Note
The
Government has issued the Notification regarding Domestic Natural Gas Pricing
Guidelines, 2014
on 10.01.2014. These Guidelines
are hosted on website of the Ministry and will be published in the Gazette of
India.
2.
The extant gas pricing policy under
NELP was earlier approved by the Government for five years commencing from
April 2009 and is due for revision with effect from April 2014. The Government had
constituted a Committee headed by DrRangarajan, Chairman, Economic Advisory Council to the Prime Minister
in May, 2012, to look into “the Production Sharing Contract (PSC) mechanism in
petroleum industry”. The Terms of Reference (TOR) of the Committee included, among others,
formulating a structure
and elements of the guidelines for determining the basis or formula for the
price of domestically produced gas, and for monitoring actual price fixation.
The Committee submitted its report in December 2012. Based on Committee Report,
Government of India (GOI) approved the Natural Gas Pricing Guidelines in its
meeting held on 27th June 2013.
3.
In pursuance of the earlier decision, GOI on 19thDecember, 2013
approved applicability of
the Guidelines for D1 and D3 gas discoveries of the NELP Block
KG-DWN-98/3, subject to
submission of bank guarantees that will be notified separately.
4.
Salient features of the Domestic Natural Gas Pricing Guidelines, 2014 are:
·
These guidelines
will be applicable to all natural gas produced domestically, irrespective of
the source, whether conventional, shale, CBM etc. These guidelines shall apply
from 1st April 2014.
·
These guidelines
shall not be applicable where prices have been fixed contractually for a
certain period of time, till the end of such period. These guidelines shall
also not be applicable where the production sharing contract provides a
specific formula for natural gas price indexation / fixation. Further, the
pricing of natural gas from small / isolated fields in the nomination blocks of
NOCs will be governed by the extant policy in respect of these blocks issued on
8th July, 2013.
·
The prices
determined under these guidelines shall be applicable to all consuming sectors
uniformly.
·
These guidelines
shall also be applicable for natural gas produced by ONGC/OIL from their
nominated fields.
·
The pricing of
natural gas produced domestically shall be based on the following methodology:
First, the netback price of all Indian imports at the
wellhead of the exporting countries will be estimated as detailed in Para 1.7
below. Since there may be several sources of gas imports, the weighted average
of such netback of import prices at the wellheads would represent the average
global price for Indian LNG imports.
Secondly,weighted average of prices prevailing at trading
points of transactions – i.e., the hubs or balancing points of the major global
markets will be estimated. For this, (a) the hub price (at the Henry Hub) in
the US (for North America), (b) the price at the National Balancing Point of
the UK (for Europe), and (c) the netback wellhead price at the sources of
supply for Japan will be taken as the average price for producers at their
supply points across continents.
Finally, the simple average of the prices arrived at
through the aforementioned two methods will be determined as the price for
domestically produced natural gas in India.
·
Domestic Gas
prices shall be notified in advance on a quarterly basis using the data for
four quarters, with a lag of one quarter.
·
In respect of D1
and D3 gas discoveries of Block KG-DWN-98/3, these guidelines shall be
applicable subject to submission of bank guarantees in the manner to be
notified separately.
*********
Ministry of Petroleum & Natural
Gas, Government of India
New Delhi January 10, 2014
RCJ/ Notification-DNGPG-2014