Oil and gas stocks today settled with as much as 4 per cent gains after the government approved near doubling of natural gas prices, a move seen positive for upstream companies.
At the end of trade, shares of RIL were up 3.78 per cent to Rs 861.85, while ONGC rose by 2.98 per cent to Rs 330.10.
Oil India that rallied 9 per cent in early session pared all its gains and closed the day 0.49 per cent lower at Rs 570.20 on the BSE.
“ONGC and Oil India rose in the morning factoring in higher gas prices. However, once Chidambaram announced that cost to the power and fertiliser companies may be lower indicated that the positive impact of gas price rise could be partially offset by higher subsidy burden. Hence, ONGC and Oil India declined after this announcement,” said Bhavesh Chauhan, Sr Research Analyst—Oil & Gas, Angel Broking.
The Cabinet Committee on Economic Affairs (CCEA) last evening approved pricing of all domestically produced natural gas at an average of the cost of imported liquid gas (LNG) on long—term contract and international gas benchmarks.
The government had yesterday approved near doubling of natural gas prices to $8.4 from April 1 next year, a move which will result in rise in power tariff, urea cost and CNG prices.
Meanwhile, a day after deciding to nearly double natural gas prices to $8, Finance Minister P Chidambaram today hinted that power and fertiliser units may get gas at subsidised rates to keep electricity and urea costs down.