“India Raises Domestic Natural Gas Price for October, Potential Impact on CNG and PNG Rates”

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The Ministry of Petroleum and Natural Gas in India has increased the price of domestic natural gas for October, implementing a new pricing formula linked to the Indian crude basket’s current price. This adjustment may lead to higher costs for consumers, affecting Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) prices.

India Raises Domestic Natural Gas Price for October, Potential Impact on CNG and PNG Rates
India Raises Domestic Natural Gas Price for October, Potential Impact on CNG and PNG Rates

In a move that could have implications for consumers and the energy market, the Ministry of Petroleum and Natural Gas in India has announced an increase in the price of domestic natural gas for the month of October. This marks the second consecutive monthly price hike, with the price being raised to $9.20 per Metric Million British Thermal Unit (mmBtu), up from $8.60 per mmBtu in September.

The significant change in the pricing mechanism is part of a new formula that now links the domestic natural gas price to the current price of the Indian crude basket. This is a departure from the previous method, which based gas prices on the rates in four major global gas trading hubs – Henry Hub, Albany, National Balancing Point (UK), and Russian gas.

Under the new pricing formula, the price of domestic natural gas will be recalibrated every month. This represents a shift towards more frequent adjustments compared to the previous system, where prices changed every six months. The transition to this new pricing mechanism follows the recommendations of a committee formed by the government in October 2022. The change is aimed at aligning natural gas prices more closely with current market dynamics to ensure fair and competitive pricing.

While this shift in pricing methodology is intended to improve the alignment of domestic gas prices with market realities, it is likely to have downstream effects on consumers. Gas distribution companies may pass on the increased costs to consumers, potentially resulting in higher prices for Compressed Natural Gas (CNG) and Piped Natural Gas (PNG).

This price adjustment underscores the government’s ongoing efforts to refine the energy pricing structure and adapt it to changing global energy market dynamics. The move reflects a commitment to ensuring that domestic natural gas prices are more responsive to market fluctuations, which is essential for maintaining a sustainable and competitive energy sector in India.

The impact of this price adjustment on consumers and the energy market will be closely monitored in the coming months as the new pricing formula settles into the market and its effects become more apparent.

Sources By Agencies

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