All gas discoveries won’t be viable even at $8: ONGC
While many political parties as well as consumer advocates have been criticizing the government for increasing the price of domestic gas, state-run Oil & Natural Gas Corporation (ONGC) has expressed concerns that even the increased price would not be able to make all gas discoveries viable.
The government has decided to increased domestic natural gas price to almost double, from current $4.2 per million British thermal units (mBtu) to $8 per mBtu from the April 1, 2014.
As per some estimates, ONGC will receive additional revenue of Rs 16,000 crore from gas price rising.
But, ONGC chairman & managing director Dinesh K Sarraf said that all of the company's gas discoveries would not be viable even at $8 per mBtu.
Speaking on the topic, he said, "In Mahanadi basin, we have 26 billion cubic metres of gas reserves which are viable to be produced only if the price is $11. We believe that price would be around $8 per mmBtu. It appears to be quite significant, but it is not in reality."
He explained that most of the additional revenue would stream back to the government in form of higher taxes, dividend and royalty.
ONGC's deepwater Krishna-Godavari (K-G) basin block (KG-DWN-98/2 block), which is situated close to Reliance Industries' KG-D6 block, will likely start production by 2017.