InvestorQ : How do you see the impact of the government gas price hike on RIL and ONGC?
prachi Patwardhan made post

How do you see the impact of the government gas price hike on RIL and ONGC?

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sara Kunju answered.
2 months ago
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In an unprecedented move, the government has sharply hiked the price of domestically produced natural gas. The price was hiked by 62% from $1.79 per MMBtu to $2.90 per MMBtu for the second half of FY22 i.e. the Oct-Mar period. MMBtu refers to million British thermal units. This is the base rate for normally procured natural gas. However, there is a higher pricing for Deepwater and ultra-deep water gas, which was hiked to $6.13/ MMBtu.

This is one of the largest spikes on a half yearly basis and is largely driven by the spike in global gas prices, which has rallied more than 100% since the start of the year. This will be positive for the extractors like ONGC, RIL and Vedanta, as they get a better price. They still need 15-20% higher prices to be remunerative. Of course, this will be negative for the gas fired fertilizer plants and for the city gas distributors, where costs will go up.

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