Natural gas prices on Friday increased 40 percent to record levels, in line with the rise in energy prices around the world. Natural gas helps to generate electricity, among other things. It is also converted into CNG and piped to house-hold kitchens for cooking.
CNG and piped natural gas (PNG), whose prices have already gone up by more than 70percent in the last year, are likely to cost more if the price of natural gas goes up quickly. Also, this is the third time that natural gas prices have gone up since April 2019. In the same way, the cost of making fertiliser will go up. But rates aren't likely to go up because the government helps pay for fertilisers.
In a statement, the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) said that the price paid for gas from oil fields went up from USD 6.1 to USD 8.57 per million British thermal units. Gas from old fields also makes up about two-thirds of all the gas made in India, which is an interesting fact.
India had to pay twice as much for LNG earlier this month because shipments from Russia's Gazprom subsidiary that were meant for India were sent to Europe instead. Due to a sharp rise in the price of natural gas on the international market, domestic automakers have also lowered their production goals for CNG-powered cars. They also expect local rates to go up even more in the next round of price changes.
At the same time, the price of gas from newer fields, like the deepsea D6 block in the KG basin, which is run by Reliance Industries Ltd and its partner BP plc, went up from USD9.92 to USD12.6 per mmBtu. These are the highest rates for regulated/administered fields like ONGC's Bassein field off the coast of Mumbai and free-market areas like the KG basin.
The price of gas is set by the government every six months, on April 1 and October 1. It is based on prices in gas-rich countries like the US, Canada, and Russia, with a one-quarter lag. So, the price from October 1 to March 31 is based on the average price from July 2021 to June 2022, when global rates went through the roof.