Press Information Bureau
Government of India
Ministry of Petroleum & Natural Gas
07 JAN 2019 4:24PM by PIB Delhi
Production cost of Natural Gas

Cost of production of natural gas depends on several factors such as location (onshore, shallow water, deep water) of gas field, quality & composition of produced gas, gas type whether associated gas or non-associated gas, age and size of the gas field, type of reservoir, logistics, availability of surface facilities, exchange rate etc. Since factors which affect cost of production are unique to each gas field,cost of production of gas varies from field to field. Government of India notified “New Domestic Natural Gas Pricing Guidelines, 2014”on 25.10.2014.  This pricing mechanism is formula based and has been worked out considering the volumes and prices prevailing at major international markets such as Henry Hub(USA), National Balancing Point(UK), Alberta(Canada) and Russia.  The formula has been finalized considering the requirements of producing and consuming sectors, and has tried to make a fine balance between their interests. The gas prices notified for 1st October, 2018 to 31st March, 2019 is US$ 3.36/ MMBTU (on GCV basis)

Further, to incentivizedomestic production of natural gas, Government notified a policy in March, 2016 to grant marketing and pricing freedom with a price ceiling on gas produced from discoveries in Deepwater, Ultra Deepwater, and High Pressure-High Temperature areas.  Government has also provided marketing and pricing freedom for the sale of crude oil and natural gas to be produced under the Discovered Small Fields Policy-2015 and Hydrocarbon Exploration and Licensing Policy (HELP). Government has also granted pricing and marketing freedom to the gas produced from Coal Bed Methane (CBM) blocks. Recently, exploration & production companies working in northeastern region have been provided marketing including pricing freedom for the gas which are yet to commence commercial production as on 1st July, 2018.

The domestic production of natural gas in the country was 31.86 Billion Cubic Meters(BCM) in financial year 2015-16, 31.34 BCM in financial year 2016-17 and 31.91 BCM in financial year 2017-18.  Domestic natural gas is allocated as per prevailing gas allocation policy wherein power sector is a priority sector and balance demand is met through import of Liquefied Natural Gas (LNG) under open general license. To incentivize domestic production of natural gas, marketing including pricing freedom has been granted in deep water, ultra deep water and High Pressure-High Temperature (HP-HT) area, in north eastern region and fields under Hydrocarbon Exploration and Licensing Policy (HELP), Discovered Small Field (DSF) Policy and Coal Bed Methane (CBM) blocks.

Natural gas production from KG-DWN-98/2 Block is proceed to start by December 2019. The peak gas production rate is projected to be about 15 Million Metric Standard Cubic Metreper Dayand the peak oil production rate is projected as about 78000 Barrels of Oil per Day.

ONGC awarded the SURF (Subsea Umbilical Risers Flowlines) and SPS (Subsea Production Systems) package on 1st October, 2018 at an award cost of about USD 1.65 billion.This project envisages production of 25.87 million metric tonnes(MMT) of oil and 45.28 BCM of gas by 2035-36.

ONGC’s standalone production of crude oil (including condensate) and natural gas in 2018-19 (April, 2018 to November, 2018) is 30.464 million metric tonnes of oil equivalent (MMTOE) as compared to 30.701 MMTOE in corresponding period of previous year 2017-18 (April, 2017 to November, 2017).ONGC is undertaking several steps to increase the production of oil / gas and has chalked out two pronged strategy i.e. redevelopment of existing matured fields and development of new fields/ marginal fields. Small/marginal fields, which were not viable on standalone basis, are being developed through cluster development concept.

This information was given by Minister of Petroleum & Natural Gas, Shri Dharmendra Pradhan in a written reply to the Lok Sabha today.