Welcome!

News Feed Item

Indian Gas Sector - A Paradigm Shift in Pricing Dynamics

MUMBAI, March 20, 2014 /PRNewswire/ --

Bharat Book Bureau presents Indian Gas Sector A Paradigm Shift in Pricing Dynamics. The Cabinet Committee for Economic Affairs (CCEA) has approved the Rangarajan Committee's proposal to raise the price of natural gas from April 1, 2014. The price of gas is expected to be raised to around $8.4/MMBTU and then revised every quarter thereafter as per the Rangarajan formula. The price of gas is determined by averaging the netback wellhead prices of Indian imports and the gas prices prevailing at global trading hubs of US, UK and Japan. http://bit.ly/1oyE2iZ

     (Logo: http://photos.prnewswire.com/prnh/20130128/590935)

While upstream oil and gas companies have been demanding a gas price increase for a few years now, the fertilizer and power sectors have voiced serious concerns over any increase in gas price. The upstream companies felt that a low price of gas did not adequately compensate them for the substantial risks involved in exploration activities. Further, the E&P companies argued that offshore exploration and production is significantly costlier than onshore exploration and the low price of gas makes deepwater and ultra-deep water exploration and production unviable. On the other hand, the power and fertilizer sectors are extremely price sensitive and any increase in the price of gas has a big impact on their profit margins. Both these sectors have zero pricing power as the prices of fertilizers and energy are heavily regulated by the government.

Request  for  sample  pages: https://www.bharatbook.com/RequestSample.asp?pid=323079

The production of gas from RIL's KG-D6 block was expected to transform the gas market in India. The gas consumers embarked on an expansion spree encouraged by the prospects of cheap and abundant gas. Although the gas field showed great promise in the initial years of production, production has been on the decline over the last two years and production has decreased to just 14 MMSCMD compared to estimated production of 80 MMSCMD. The gas utilization policy of the government that assigns priority to various sectors for allocation of domestically produced gas resulted in a skewed distribution of gas supply when domestic production declined, benefiting the fertilizer sector at the expense of the power sector. While the supply of gas to the fertilizer sector was not affected due to the decline in domestic production, owing to higher priority, the supply to the power sector reduced substantially leading to an overall drop in gas power plants PLFs across the country. As a result, the power industry in India is facing an extremely tough business environment. The sourcing of fuel, both coal and gas, has become extremely difficult. The power companies are burdened by excessive debts and banks have become weary of lending to the sector.

The decline in domestic production of gas has increased the country's dependence on imported LNG. The share of LNG in total gas consumption has reached around 30% and has been increasing over the years. There was a huge disparity in prices of domestic gas and LNG. While domestic gas cost consumers around $4.2-5.5/MMBTU, LNG prices were in the range $13-18/MMBTU.

Private gas producers have argued that gas should be sold at a competitively determined 'arms length' price in line with provisions of the production sharing contracts. However, given the large supply-demand mismatch and dependence on imported LNG, competitive bidding for gas results in a price of gas which is almost at parity with imported LNG. GSPC and RIL conducted competitive bidding to sell gas from their Deena Dayal West (DDW) field and Madhya Pradesh CBM block respectively. The bidding resulted in gas prices as high as $12-14/MMBTU. There was however a difference of opinion between the petroleum ministry and the producers over the manner in which the bidding for gas took place. The ministry was of the view that the bidding should have been confined to only power and fertilizer companies, those who were in the priority allocation list.

The power ministry said that power generation from gas power plants would become unviable at a gas price above $5/MMBTU. Gas cannot compete with coal as a source of energy at higher prices due to increased cost of energy generation.

The increase in gas price will have a huge financial impact on the power and fertilizer sector. The impact on the power sector is expected to exceed Rs 46,000 crore per annum and the impact on the fertilizer sector will be more than Rs 17,000 crore per annum, according to some estimates. The government will need to support these two sectors to mitigate the financial impact of the price increase. The government hopes that increased revenue from oil and gas sector in the form of higher profit sharing, royalty and taxes will offset the financial subsidies outgo to the fertilizer and power sectors.

Availability of gas is expected to be a constraint for gas consumers at least for the next three years. The dependence on imported LNG will increase. The high price of gas is likely to hit demand in the power and fertilizer sectors. The rate of capacity addition in these sectors will slow down significantly due to high prices. The CGD sector will emerge as a major consumer of gas and will grow at the fastest pace among gas consumers. Gas is a viable replacement for liquid fuels such as diesel even at higher gas prices/LNG import prices. The CGD sector, refineries and other industrial users are expected to drive the demand for LNG imports.

The gas shortage is expected to ease after 2016-17 as investments in development of new fields and redevelopment of existing fields lead to higher domestic gas production. Imported LNG supplies are also expected to be ramped up with the commissioning of new LNG terminals and expansion of existing terminals. In the meantime, the struggle to source gas will continue and gas consumers will have to bear the burden of higher gas prices.

Request  for  sample  pages: https://www.bharatbook.com/RequestSample.asp?pid=323079

Table  of  Contents

  • Executive Summary
  • Industry Overview
  • The Current Pricing Paradigm: The Rangarajan Formula
  • Impact Analysis of Increase in Gas Price for Fertilizer and Power Sector
  • LNG Imports
  • Rangarajan Committee's Price Formula: Views of different stakeholders
  • Demand Side Dynamics of Gas
  • Dynamics of Gas Supply
  • Demand Supply Gap: An Analysis
  • KG-D6: Production Paralysis and its implications
  • Gas pricing mechanisms around the world
  • Case Studies: Pricing Formations in Foreign Countries
  • Conclusions

For  more  information  and  complete  table  of  content:

https://www.bharatbook.com/oil-and-gas-market-research-reports-323079/indian-gas-sector-a-paradigm-shift-in-pricing-dynamics.html

Related  Reports:

Related  Category:

About  Bharat  Book  Bureau

Bharat Book Bureau is the leading market research information aggregator that provides market research reports, industry analysis, company profiles, business reports, country reports, newsletters and online databases. Our clients include Corporate, Consulting firms, and Academic Institutions and Government departments across the globe. Bharat Book Bureau provides over a million reports from more than 400 publishers around the globe. The market research reports we provide, help global companies examine the different markets before setting up a business or expanding into different countries across the world. They give a complete perspective on the current market scenario, trends, segments and future outlook.

Contact  us:

Poonam

Bharat Book Bureau

USA/Canada - 1-866-279-8368 (Toll free)

India: +91-22-27810772, 27810773

Blog: http://blog.bharatbook.com

E: [email protected]

W: http://www.bharatbook.com

SOURCE Bharat Book Bureau

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
SYS-CON Events announced today that SourceForge has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. SourceForge is the largest, most trusted destination for Open Source Software development, collaboration, discovery and download on the web serving over 32 million viewers, 150 million downloads and over 460,000 active development projects each and every month.
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
One of the biggest challenges with adopting a DevOps mentality is: new applications are easily adapted to cloud-native, microservice-based, or containerized architectures - they can be built for them - but old applications need complex refactoring. On the other hand, these new technologies can require relearning or adapting new, oftentimes more complex, methodologies and tools to be ready for production. In his general session at @DevOpsSummit at 20th Cloud Expo, Chris Brown, Solutions Marketi...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists discussed...
Elon Musk is among the notable industry figures who worries about the power of AI to destroy rather than help society. Mark Zuckerberg, on the other hand, embraces all that is going on. AI is most powerful when deployed across the vast networks being built for Internets of Things in the manufacturing, transportation and logistics, retail, healthcare, government and other sectors. Is AI transforming IoT for the good or the bad? Do we need to worry about its potential destructive power? Or will we...
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.
Many organizations adopt DevOps to reduce cycle times and deliver software faster; some take on DevOps to drive higher quality and better end-user experience; others look to DevOps for a clearer line-of-sight to customers to drive better business impacts. In truth, these three foundations go together. In this power panel at @DevOpsSummit 21st Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, industry experts will discuss how leading organizations build application success from all...
SYS-CON Events announced today that SIGMA Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. uLaser flow inspection device from the Japanese top share to Global Standard! Then, make the best use of data to flip to next page. For more information, visit http://www.sigma-k.co.jp/en/.
SYS-CON Events announced today that Daiya Industry will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Daiya Industry specializes in orthotic support systems and assistive devices with pneumatic artificial muscles in order to contribute to an extended healthy life expectancy. For more information, please visit https://www.daiyak...
The last two years has seen discussions about cloud computing evolve from the public / private / hybrid split to the reality that most enterprises will be creating a complex, multi-cloud strategy. Companies are wary of committing all of their resources to a single cloud, and instead are choosing to spread the risk – and the benefits – of cloud computing across multiple providers and internal infrastructures, as they follow their business needs. Will this approach be successful? How large is the ...
Your clients expect transactions to never fail, cloud access to be fast and always on, and their data to be protected - no exceptions. Hear about how Secure Service Container (SSC), an IBM-exclusive open technology, enables secure building and hosting of next-generation applications, both cloud and on-premises. SSC protects the full stack from external and insider threats, allows automatic encryption of data in-flight and at-rest, and is tamper-resistant during installation and runtime – with no...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
SYS-CON Events announced today that B2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. B2Cloud specializes in IoT devices for preventive and predictive maintenance in any kind of equipment retrieving data like Energy consumption, working time, temperature, humidity, pressure, etc.