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Union Cabinet Approves Guidelines for Natural Gas Marketing, Will Lead to Uniform Prices

The logo of India's state-owned natural gas utility GAIL (India) Ltd.

REUTERS/Adnan Abidi/File Photo

The logo of India's state-owned natural gas utility GAIL (India) Ltd. REUTERS/Adnan Abidi/File Photo

Sources in the government said the main thrust of the guidelines is to provide better price discovery of natural gas through competitive method, which is expected to lead to uniform gas pricing.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the guidelines for natural gas marketing, which will be applicable to natural gas producers.

Sources in the government said the main thrust of the guidelines is to provide better price discovery of natural gas through competitive method, which is expected to lead to uniform gas pricing.

The government has allowed complete marketing freedom for natural gas produced from non-regulated fields, including sale to affiliate companies. The Union Cabinet, headed by Prime Minister Narendra Modi, approved a standard e-bidding procedure to discover price of gas.

While producers will continue to be barred from participating in such auctions, affiliates would be allowed to bid, Oil Minister Dharmendra Pradhan told reporters here. However, the existing pricing mechanism for gas produced by state-owned ONGC and Oil India Ltd from fields given to them on a nomination basis would continue.

The marketing reform would help add 40 metric million standard cubic metres per day (mmscmd) of production to the existing output of 84 mmscmd, he said.

Meanwhile, the Centre has also approved three new natural gas marketing reforms to give a boost to the gas economy and reduce import dependence. This includes setting up a new e-bidding platform, prohibiting producing companies from participating in the bidding process, and bringing all different fiscal models under the new bidding mechanism.


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