ONGC demands at least \.75 per unit for gas

New Delhi, Aug 13: State-run upstream major ONGC has demanded at least Rs 4.75 dollars per million British thermal unit (mBtu) for its gas and has warned that its over six-billion dollar investment could become infructious if it does not get the price.

''The price has to be remunerative to take care of increased cost of oil services and to take exploration risk. This is more relevant in respect of gas produced from Deep water/East coast in view of the advanced technology, high development cost and delivery cost,'' ONGC Chairman and Managing Director R S Sharma recently wrote to Petroleum Secretary M S Srinivasan.

Mr Sharma wrote that there is a clear logic that ONGC shoud get market determined prices for its additional and new gas immediately.

''It is also submitted that the price of APM gas should be brought to market level over a period of time,'' he added.

Mr Sharma said the prices of natural gas in India are much lower than international prices and the cost plus mechanism deters investment and competitiveness. He pointed out that the Cabinet in its decision in June 2005 has also recognised that additional and new gas must be sold at market determined prices.

ONGC has said that it is incurring a Rs 700 crore loss due to the rise in gas prices world wide.

Prime Minister Manmohan Singh has referred the pricing of gas to an Empowered Group of Ministers (EGoM).

The Anil Ambani Group wants the government to allow the market to determine prices for companies investing in gas exploration.

UNI