Mumbai: State-owned explorer Oil and Natural Gas Corporation (ONGC) has sought a 40 per cent hike in the price of natural gas, which is currently regulated by the government.

"We are hoping the price of gas under the administered price mechanism (APM) will be raised to Rs4.5 per cubic metre (excluding royalty) from Rs3.2 per cubic metre currently," ONGC chairman and managing director R S Sharma said.

ONGC loses around Rs700 crore annually for selling 47-48 million standard cubic metres per day of natural gas below the cost of production.

ONGC was expecting a minimum increase in gas price to Rs4.1 per cubic meter (excluding royalty). Together with 10 per cent royalty, the consumer price would be Rs4.5 per cubic metre ($2.5 per million British thermal units) against the current price of Rs3.2 per cubic meter ($1.97 per mBtu).

"There has been an in-principle agreement that ONGC deserves higher gas price. We are awaiting final decision now," Sharma said, adding that the company would gain Rs2,000 crore in annual revenues if prices were raised.

The tariff commission had in May recommended a base price of Rs3.6 per cubic metre ($2.21 per mBtu).

ONGC expects to produce 15 million cubic meters of gas daily from 2012 at its KG offshore field.

``Exploration appraisal and development activities in the ultra-deepwater areas are envisaged to further enhance the production profile,'''' Sharma told shareholders in New Delhi.