Oil Minister M Veerappa Moily on Wednesday defendeddoubling of gas prices from 2014 saying the move will help bring to production over 3 Trillion cubic feet of gas reserves that had been declared economically unviable at current rates of $4.2.
"Approximately 3 Tcf gas reserves is lying to be exploited which cannot be monetised if the gas price remain at the present level of $4.2 per million British thermal unit," he said addressing a seminar organised by Assocham.Several gas discoveries of firms like Oil and Natural Gas Corp (ONGC) and Reliance Industries have been declared unviable by the Directorate General of Hydrocarbons (DGH) as current gas price of $4.2 was inadequate to cover the cost.
"The ministry is rejecting the monetisation of new discoveries as their production will not be viable at the present price of $4.2," he said. Besides making deepsea gas finds viable, the new pricing regime which kicks in from April 1, 2014 would help revive the almost dead investment in the oil and gas hunt. "There has been consistent decline in the investment in this sector which was around $6 billion in 2007-08 and dropped down to a meagre $1.8 Us billion in 2011-12," he said adding at the same time Indian firms invested $27 billion abroad and another $10 billion was in pipeline.
"Therefore, it is evident that we have no choice left but to take immediate measures to make the domestic gas production sector viable," he said.With unremunerative price, gas production in India has declined from a peak of 143 million standard cubic metres per day in 2010-11 to 111 mmscmd in 2012-13.
EGoM votes for status quo on gas allocation to urea plants
Opting for a cautious route, the Government on Wednesday chose not to reduce gas supplies to urea plants as an empowered ministerial panel felt that any such move would have an adverse effect on the agriculture sector, while at the same time it decided to device a strategy for making available additional supply of the natural resource to the power sector, on which a decision would be taken in its next meeting on July 22.
An empowered Group of Ministers (eGoM) led by Defence Minister A K Antony which met to discuss the Petroleum Ministry’s proposal of doing away with priority allocation of gas to the fertiliser sector and giving preference to the power sector, rejected the proposal. Briefing media persons after the meeting, Petroleum Minister M Veerappa Moily said that the fertiliser sector’s interests would be fully protected while options would be explored to provide additional supplies to the critical power sector.