Natural Gas Price May Go Up By 18% From April

SEATTLE (Oil Monster):  The domestically produced natural gas price, which is expected to go up during April-September period, will still be lower than $4 a unit (gas is measured in million British thermal units). The increase will mean a spike in prices of piped cooking gas (LPG) and compressed natural gas (CNG) used as transportation fuel.

According to analysts, the next revision will push up the price by a maximum of 18 per cent from the current rate of $3.36 a unit. The domestically produced gas price is revised bi-annually based on a formula approved by the government.

Crisil Research feels that the next revision (for April-September) is expected to push up domestic gas price by 7-9 per cent to $3.62-3.67 per mBtu (million British thermal units).

Comparably, Crisil Research estimates spot Liquefied Natural Gas (LNG) prices to be in the range of $6.5-7 per mBtu)in the first half of 2019-20.

“This increase is expected to be fully passed on to end-consumers, making CNG and household PNG dearer. CNG prices are expected to increase by Rs. 1.5-Rs. 2 per kg in Mumbai and Rs. 1.7-2.2 per kg in Gujarat – amounting to a 3-4 per cent increase over current prices. In the household PNG segment, an increase of 2-2.5 per cent is expected,” CRISIL Research said.

While Crisil is still conservative in its estimates, CARE Ratings is a projecting steeper hike. “We believe the prices of domestic natural gas for the April-September 2019 period will increase from the current $3.36 a mBtu to approximately $3.97 a mBtu, resulting in an 18 per cent increase,” Care Ratings said.

According to Care Ratings, the rise in natural gas price will increase the manufacturing cost of urea and petrochemicals where natural gas is used as a feedstock.

“There will be a rise in the prices of CNG and PNG which will affect the consumers. Increase in price of natural gas will also affect the margins of the power sector and sponge iron industry where it is used for generation of energy,” Care Ratings said.

 Courtesy: www.thehindubusinessonline.com