Union Information and Broadcast Minister Anurag Thakur said that the price of the natural gas shall be 10 percent of the monthly average of Indian Crude Basket and shall be notified on the monthly basis. During a press conference following a union cabinet meeting, he said that there will be a monthly notification to ensure stable pricing in the system and give producers appropriate protection from unfavourable market fluctuation.According to the Union minister Anurag Thakur, the rules will guarantee a stable pricing structure for domestic petrol users, give producers enough protection from unfavourable market fluctuations, and offer incentives for increasing output. The rules will apply to gas generated from ONGC/OIL nomination fields, NELP and pre-NELP blocks, as well as new exploration licence policy blocks. The new rules will be in effect starting on Saturday.He said that the change in the guidelines will ensure stable pricing for domestic gas consumers. This will help in providing adequate protection to producers from the adverse market. According to the official statement, by 2030, the government wants to boost natural gass proportion in Indias primary energy mix from the current 6.5 percent to 15 percent. The changes will aid in increasing natural gas use and will aid in achieving the goal of net zero emissions.During the press conference Union Minister Anurag Thakur also quoted that “The price of petrol on the international market was USD 1.79/MMBtu on October 1, 2020, but it increased to USD 8.57/MMBtu on October 1, 2022. The users have to face the price increase as a result.”These changes are a continuation of the numerous steps the Indian government has taken to safeguard consumer interests. They will significantly increase the domestic gas allocated to the city gas distribution sector, which will lessen the impact of rising gas prices internationally on domestic gas prices in India.The revisions will result in a significant drop in the cost of compressed natural gas (CNG) for transportation as well as piped natural gas (PNG) for homes. The decreased costs will also benefit the domestic power sector and ease the burden of fertiliser subsidies. This reform will encourage Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) to make further long-term investments in the upstream sector, increasing natural gas output and reducing the reliance on imports of fossil fuels as a result. It also provides a floor on gas prices and a 20 percent premium for new wells. The expansion of the gas-based economy will help to reduce the carbon footprint thanks to the updated pricing policies.Currently, the domestic gas prices are determined as per the new Domestic Gas Pricing Guidelines, 2014 which were approved by Government in 2014. The 2014 pricing guidelines provided for the declaration of domestic gas prices for 6 months based on the volume-weighted prices prevailing at four gas trading hubs – Henry Hub, Albena, National Balancing Point (United Kingdom), and Russia for 12 months and a time lag of a quarter.As the earlier guidelines based on 4 gas hubs had a significant time lag and very high volatility, the need for this rationalization and reform was felt. The revised guidelines make prices linked to crude, which is a practice now followed in most industry contracts, more relevant to our consumption basket and has deeper liquidity in global trading markets, on a real-time basis. With the changes now approved, data on Indian Crude basket prices from the previous month would form the basis for APM gas price determination.Overall, after the change in the guidelines, the prices of domestic gas for households and vehicles will come down.
