The Government will notify the new gas pricing policy before Sunday, said Vivek Rae, Secretary Petroleum & Natural Gas.
“It is ready, we are just looking at the fine print,” Rae told mediapersons at the sidelines of a CII Business Partners conference.
The new gas pricing mechanism, as suggested by a panel headed by C. Rangarajan, Chairman of Prime Minister’s Economic Advisory Council, has been given the go-ahead by the Cabinet Committee on Economic Affairs (CCEA). This policy puts in place a formula-based method to determine gas price in the country from all sources.
“We will unveil the first set of 46 blocks cleared by the Ministries concerned. This is for people to have an idea of what’s on offer...The exact terms and conditions of bids will be rolled out in a few weeks because that will depend on the revenue sharing contracts,” Rae said.
Currently, the Petroleum & Natural Gas Ministry is looking at the revenue sharing model as recommended by Rangarajan committee, which would govern the contract between explorers and Government for the auctioned blocks.
“We have circulated the proposal to various Ministries. Once the responses come, we will approach the Cabinet,” he said.
However, there is a difference of opinion. Some operators say that the existing cost recovery model should continue, while others do not have problem with revenue sharing, he added.
SUBSIDY BURDEN Public sector explorers such as ONGC and Oil India are unable to drill nearly 70 million tonnes of crude oil, as heavy subsidy burden prevents them from investing in discoveries.
“They need more money to monetise some of the discoveries. There are certain discoveries viable at $65/barrel. If they get only $40-42/barrel, they cannot develop them,’’ Rae said.
These discoveries are in Bombay High and KG basin in the East Coast. Nearly 70 million tonnes of crude oil resources are trapped in these acreages.
According to Rae, it makes sense to invest $65/barrel and get that oil out, rather than spending $105/barrel to import.
“There is need to review the burden sharing formula,’’ he added.
Public sector explorers such as ONGC and Oil India subsidise oil marketing companies (IOC, HPCL, BPCL) for selling diesel, PDS kerosene and domestic cooking gas below market cost.