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India introduces new gas marketing mechanism to help producers

India will let companies producing gas from new local fields sell the cleaner fuel on e-bidding platforms, oil minister Dharmendra Pradhan said, in a move expected to help them get better prices and boost output.

India wants to raise the share of gas in its energy mix to 15% by 2030 from 6.2% now but it currently relies on imports for half of its daily gas needs of 160-170 million standard cubic meters (mmscm).

Pradhan said the new, more transparent price discovery mechanism would help raise daily gas production from the Krishna Godavari basin on the east coast and other parts of the country by 40 mmscm.

Reliance Industries and Oil and Natural Gas Corp (ONGC) operate blocks in the Krishna Godavari Basin.

“Pricing obtained through the e-bidding platforms will be applicable to the gas discoveries whose field development plan was approved after February 2019,” Pradhan told a news conference.

He said the directorate general of Hydrocarbons would set guidelines for the platforms, though he did not say when the e-bidding mechanism would start.

Gas producers will not be allowed to participate in the e-bidding because of conflicts of interest, Pradhan said, though affiliated firms would be able to compete with other gas buyers.

The minister also said the existing fixed-price formula for gas produced from old blocks operated by state-owned ONGC and Oil India Ltd would continue.

India slashed prices of gas from those blocks last month by about a quarter to $1.79 per million metric British thermal units (mmBtu), the lowest since 2014.

Reporting by Nidhi Verma; Editing by David Clarke


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