ONGC Says Current Price is not Enough to Make the Discoveries Viable

State-owned Oil and Natural Gas Corp (ONGC) has sought more than doubling of natural gas prices to help bring significant discoveries in KG basin and Gulf of Kutch to production. 
Gas discoveries in shallow sea off Andhra Pradesh on the east, and off Gujarat on the west are economically unviable to produce at the current government-mandated price of USD 2.89 per million British thermal unit, a senior company official said. 
The company wants a price of over USD 6 per mmBtu to help it produce the gas without suffering any losses. In the absence of a viable gas price, it will have to mothball the USD 1.5-billion projects, he added. 
"We have made representation to the government that the current price is not enough to make the discoveries viable. We have sought special pricing dispensation," he said. 
The BJP-led government in October 2014 had evolved a new pricing formula using rates prevalent in gas surplus nations like the US, Canada and Russia to determine rates in a net importing country. 
While prices have halved to USD 2.89 since the formula was implemented, the government has allowed a higher rate of USD 6.3 per mmBtu for gas fields in difficult areas like deepsea. 
The official said the Krishna Godavari basin block KG- OWN-2004/1 is in shallow water and does not qualify as a 'difficult field'. 
On the western side, the block GK-28 in Gulf of Kutch is a nomination block which does not qualify for higher rates, he said. 
While the KG block will produce a peak output of 5.35 million standard cubic meters per day, the same from Gulf of Kutch block will be around 3 mmscmd. It would take a minimum three years to bring the gas finds to pro.