Higher rates will help increase domestic gas output: Moily
Oil Minister M. Veerappa Moily on Friday said higher rates will help raise domestic gas production and cut dependence on imports.
While the government had in June approved a new formula for pricing of all domestically produced natural gas, the Cabinet on Thursday allowed the same principles to also be applied to Reliance Industries’ currently producing fields in KG-D6 block subject to certain conditions.
“If you don’t raise gas price, no domestic production will come and dependence on imports will increase,” Mr. Moily said at the AIMA’s 3rd PSU Summit in Delhi.
India, which currently imports half of its gas needs, has the hydrocarbon potential, which requires lot of money to exploit, he said. “You need to spend a lot of money on technology (to access the hydrocarbon) and research.”
Several gas discoveries of firms like Oil and Natural Gas Corp (ONGC) as well as of RIL had been declared unviable by the Directorate General of Hydrocarbons (DGH) as current gas price of USD 4.2 per million British thermal unit was inadequate to cover the cost.
“We may end up importing 100 per cent (of our needs) if we don’t encourage exploration,” Mr. Moily said.