Fortune at stake as Indian government weighs gas prices

Global oil majors such as Exxon Mobil, Royal Dutch Shell and Chevron Corp are ready to pour billions of dollars into India’s energy sector – but only if the government stops meddling and allows private firms to sell gas at market prices.

New Delhi is set to approve a price formula for Reliance Industries Ltd’s natural gas, according to local media, but any move to raise prices faces opposition from the politically influential power and fertiliser sectors, which consume three-quarters of the gas produced in India.
If Reliance wins this battle, the oil majors would be more willing to invest their money and know-how in oil and gas exploration in India, where politics and aggressive local players have previously kept them away.

Reliance, India’s biggest private company, is spending $5.2 billion to develop two gas fields in a block in the Krishna Godavari basin off the east coast, eyeing production of up to 80 million cubic metres per day by this time next year.

Gas demand in India, Asia’s fast-growing, third-largest economy, runs at around 179 million cubic metres a day, but domestic gas availability is only around 95 million.

Firms say the right to sell oil and gas at market prices is in government contracts with exploration companies, and the government should not be interfering.

Gulf News