Gas Price: ONGC To Profit By Over 4000 Crore, Says Chairman

New Delhi: In a first reaction from the exploration industry to the new natural gas price announced Saturday, state-run oil and Natural Gas Corp (ONGC) said the company stood to increase its profits annually by 2,000 crore.

"Every $1 rise in gas price increases our revenues by 4,000 crore and net profit by 2,350 crore," ONGC chairman D.K. Sarraf told reporters here.

For the five months of current fiscal, ONGC stands to benefit about 1,950 crore, while a $2 increase in gas price will result in the company's net profits going up by about 4,700 crore, Sarraf added.

The government Saturday announced that the price from Nov 1 will be calculated on the heat value gas will generate on gross calorific value (GCV) basis.

As per the GCV methodology, the current $4.2 per unit, which is on net calorific value (NCV) basis, will rise to $6.1.

Sarraf is also hopeful of further hikes to gas rates that will be revised every six months, with the next revision being on April 1.

In its presentation to the Committee of Secretaries tasked to revise the gas price, ONGC had said it needs $6-7.15 per unit to break even on gas it plans to produce from its KG basin blockand a price of between $5.25-17.80 per unit to break even on production planned from seven small fields in the western offshore.

"As per the formulation approved by the CCEA, upward revision in gas prices will be approximately 75 percent less as compared to the price arrived at using Rangarajan formula," said a Cabinet Committee on Economic Affairs release announcing the revised formula.

Also Read:
Out Of Africa: The Most Stunning Tented Hotels In India
Complacency Is A Big Danger For Any Business, Ratan Tata Says