Centre has notified higher price for gas produced from new wells of ONGC and Oil India, at 20% premium over the Administered Price Mechanism, ONGC informed stock exchanges on August 12.
The higher price for new gas makes the development of the projects viable, ONGC said, adding that it will help the company enhance productions in challenging fields.
The government has last year, on recommendation of Kirit Parikh Committee, had capped gas prices from legacy fields at $6.5 MMTBU. Meanwhile, gas produced from difficult fields, i.e., deep water, ultra-deep water and HPHT areas were fixed at $9.87 per MMBTU for six months starting April 2024.
The government has now notified that gas produced from new wells, including in legacy fields, would be paid a premium of 20 percent over the APM price.
ONGC added that the guidelines will enhance the investment capacity to take up projects that are
otherwise capital intensive and involve higher degree of risks.
The guidelines align with the vision of increasing the share of natural gas in India's energy basket from 6 percent to 15 percent by 2030, ONGC added.
Shares of ONGC and Oil India spiked in the final hour of trade, ending over 2.6 percent higher. Over the past five sessions, the shares of ONGC have risen by over 7 percent, while that of Oil India gained by 15 percent.
The board of ONGC recently approved Daman Upside Development project at Mumbai High at Rs 7,800 crore, to boost domestic gas production. The peak production from this project is expected to be around 5 MMSCMD.
ONGC Board also approved another project under DSF-II, costing around Rs 6,000 crore with a peak production of around 4 MMSCMD of gas.
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