Natural gas price likely to rise record level this week.

Prices of natural gas are expected to witness a rise to record levels at the rate review scheduled this week.

Reportedly, the government will announce the revised price for natural gas produced in the country on October 1.

The rate paid for gas produced from oil fields owned by Oil and Natural Gas Corporation (ONGC) is likely to witness a rise to USD 9 per Million British Thermal Unit (mmBtu) from the current USD 6.1.

Difficult fields like the ones in Reliance Industries Limited and its partner bp plc operated D6 block in KG basin, are likely to get around USD 12 Million British Thermal Unit (mmBtu) compared to the current rate of USD 9.92, media reported.

It is to be noted that this will be the third increase in rates since April 2019 and comes on the backdrop of firming benchmark international prices.

The government sets the price of gas every six months, on April 1 and October 1 each year, based on rates prevalent in gas surplus nations such as the US, Canada, and Russia in one year with a lag of one quarter.

In 2014, the Government used prices in gas surplus countries to arrive at a formula for locally produced gas. The rates according to this formula were subdued and at times lower than the cost of production till March 2022 but rose sharply thereafter, reflecting the surge in global rates in the aftermath of Russia's invasion of Ukraine.

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