Pricing and marketing freedom are a must for investment as costs of finding and producing natural gas from deposits several hundred metres below seabed are market-driven, producers have told a government-appointed panel reviewing pricing.
In an investor call post announcement of the company’s Q2 earnings on October 21, Sanjay Roy, senior vice-president for exploration and production, Reliance Industries, stated that producers are being represented by the Association of Oil and Gas Operators (AOGO) at the panel, whose report is expected in the next few weeks.
“Potentially, the upstream producers are saying that there should be marketing and pricing freedom, under the policies and the contracts,” he said. “The counter to elevated prices is an increment to production, as we have seen in the case of KG-D6, and these investments will have to happen in frontier areas where there seems to be larger potential for such investments.”
Reliance and partner BP plc are investing about $5 billion in newer and deeper fields in the Bay of Bengal block KGD6, which are now producing over 19 million standard cubic metres of gas per day or about 20 per cent of India’s output.
“You will need a huge scale of investments, billions of dollars, and for that to sustain, marketing and pricing freedom will be very important, particularly as costs are market driven. So, prices need to be similar,” he said.
