Mumbai: Public Sector Oil and Natural Gas Corporation (ONGC) has demanded a minimum price of $4.75 per mBtu for gas it produces from private fields and a 12.5 per cent increase in the administered price of Rs3.2 per cubic metre ($1.97 per million British thermal units).

ONGC''s realisation, after paying for royalties and taxes, was even lower at Rs2.97 per cubic metre against the actual cost of production of Rs3.272 per cubic metre, thereby incurring a loss of Rs0.302 per cubic metre, chairman and managing director R S Sharma said.

"As per the audited cost accounting records for the year 2005-06, ONGC had negative margin of Rs0.302 per cubic meter on gas business," he said in a letter to petroleum secretary.

ONGC produced around 38.77 million standard cubic meters per day of gas from fields allocated to it on a nomination basis at a price fixed by the government (under the administered prices mechanism (APM)) in 2007-08. ONGC expects to produce another 8.38 mmscmd of gas from fields outside the purview of the APM.

The APM gas price should be raised to a minimum of Rs3.6 per cubic meter as recommended by the tariff commission, Sharma said, adding, the price should be raised by an average 20 per cent annually so that it is gradually aligned to the market.

For non-APM gas, "the market price should at least be at parity with prices finalised in recent past for gas (from private fields) with minimum benchmark of $4.75 per mBtu," he wrote.

The ONGC demand comes amidst a row over gas pricing by Reliance Industries and the referring of gas pricing to a group of ministers after power and fertiliser sectors in general and the Anil Ambani Group in particular sought government intervention in gas pricing.