Oil Fields_subsidy_ProjectsMonitorOIL has requested the petroleum ministry to ensure that the price parity is maintained to all domestic gas producers for production of natural gas from all sources and the Company is not subjected to any additional subsidy burden on its gas price realization.

OIL informed the ministry that the cost of producing natural gas from the existing producing fields of OIL is increasing significantly due to depleting fields, higher cost of inputs and services, and general inflationary pressures in the economy. The new exploration and production activities have become costlier. They require substantial investments and production from these new areas can be commercially viable only if higher price is allowed for production from these fields.

It further stated that in the current scenario, the Company competes with private sector and multi-national oil companies in the bidding in NELP rounds and it is essential that price parity is maintained for its production of natural gas with that allowed to other producers.

OIL also informed the ministry that the crude oil prices realized by the Company has been stagnant for the last several years and has come down during 2012-13. In the first quarter of current year, the realization has come down to USD 46 per barrel due to lower international crude oil prices and continuation of subsidy at USD 56 per barrel, which was fixed when international crude price was USD 110 per barrel.

OIL asserted that keeping in view the need for higher investments required in the E&P sector, it is necessary that OIL should at least realize full price of the natural gas in line with ‘Natural Gas Pricing Guidelines 2013’. Hence, it should not be asked to bear any burden dug to fixation of lower input prices if any, for power and fertilizer sectors.


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