ONGC Chairman and Managing Director Dinesh K Sarraf said on Tuesday that there is a need for higher gas price to monetise discoveries. Sarraf took over as head of the country's largest explorer on March 1.
"We believe that price (new gas price from April 1) would be around $8 per mBtu. It appears to be quite significant, but it is not in reality," Sarraf told media persons.
Revenues
ONGC's revenue is expected to get a boost by Rs 4,000 crore per annum for every dollar increase in gas price. If new gas price is $8/mBtu from $4.2/mBtu now, the increase in revenue would be around Rs 16,000 crore, while increase in bottomline would be around Rs 9,600 crore. The net impact on cash balance would be Rs 5,200 crore, Sarraf said.
But there are still discoveries made by ONGC that are not viable at $8/mBtu. For example, two discoveries have been found in the Mahanadi Basin. "But these discoveries at Mahanadi are viable at gas price of $11/mBtu to have 10 per cent return," said NK Verma, Director (Exploration) of ONGC. The explorer will not able to monetise them till it gets a higher price.
ONGC targets to produce gas from Krishna Godavari basin by 2017.
Sarraf said that it is a myth that production is not going up. In fact, production is increasing at around 8 per cent. He said that his focus would be to achieve output of 130 million tonnes a year by 2030 from about 60 million tonnes at present.
Source: HBL
"We believe that price (new gas price from April 1) would be around $8 per mBtu. It appears to be quite significant, but it is not in reality," Sarraf told media persons.
Revenues
ONGC's revenue is expected to get a boost by Rs 4,000 crore per annum for every dollar increase in gas price. If new gas price is $8/mBtu from $4.2/mBtu now, the increase in revenue would be around Rs 16,000 crore, while increase in bottomline would be around Rs 9,600 crore. The net impact on cash balance would be Rs 5,200 crore, Sarraf said.
But there are still discoveries made by ONGC that are not viable at $8/mBtu. For example, two discoveries have been found in the Mahanadi Basin. "But these discoveries at Mahanadi are viable at gas price of $11/mBtu to have 10 per cent return," said NK Verma, Director (Exploration) of ONGC. The explorer will not able to monetise them till it gets a higher price.
ONGC targets to produce gas from Krishna Godavari basin by 2017.
Sarraf said that it is a myth that production is not going up. In fact, production is increasing at around 8 per cent. He said that his focus would be to achieve output of 130 million tonnes a year by 2030 from about 60 million tonnes at present.
Source: HBL
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