(ET)
India is considering a floor price for natural gas produced from local fields to shield explorers like state-run Oil & Natural Gas Corp. as tariff slumps, people with knowledge of the matter said. Shares of explorers gained. The proposal being considered by the oil ministry pegs the price to the popular benchmark Japan-Korea Marker that is used for LNG tariff in North Asia with a discount, the people said, asking not to be identified as the discussions were private. India’s oil ministry has formed a panel to study the plan and explore other options to make gas production remunerative, they said.
Price of natural gas produced from domestic fields that were handed over to ONGC and Oil India Ltd. have fallen to the lowest in a decade and are below the imported price of the fuel. Prices are linked to some international gas markets such as the U.S., Canada, Russia and the U.K. A global glut that led to a price crash is threatening to undermine investments and turn gas businesses of ONGC and Oil India unviable.
