ONGC calls for rational gas pricing, terms current pricing unviable

According to state-owned Oil and Natural Gas Corp (ONGC) it would not be economically viable to produce gas from its Krishna-Godavari basin block at the current $4.20 per mmBtu sale price.

ONGC, which has struck gas in a block located next to Reliance Industries' prolific KG-D6 block off the Andhra coast is demanding a price of over $7 per mmBtu.

"I am categorically stating that current price levels are not viable to make investments," ONGC chairman and managing director R S Sharma told reporters in New Delhi.

The government's $4.20 per mmBtu sale price of gas from RIL's KG-DWN-98/3 or KG-D/ block for five years, now being considered as a benchmark is lower than $5.7 per mmBtu that gas from BG-led Panna/Mukta and Tapti fields command.

"This ( $4.2 per mmBtu) is not a viable price for making future investments. Nobody in the world makes investments at these price levels," Sharma said.

Production of gas from ONGC's KG-DWN-98/2 block in 2015-16, is to begin earlier than the previously projected 2013.