Natural gas production no longer profitable business: ONGC

State-owned Oil and Natural Gas Corp (ONGC) has said that producing natural gas is no longer a profitable business for the company as the government-mandated gas price is significantly below the cost of production.

The BJP-led government had in October 2014 evolved a new pricing formula using rates prevalent in gas surplus nations like the US, Canada and Russia to determine rates in a net importing country.

Prices have halved to $2.48 per million British thermal unit since the formula was implemented. ONGC Chairman and MD Dinesh K Sarraf said the company lost Rs 5,010 crore in revenue on natural gas business, and about Rs 3,000 crore in profit in just last one year because of cuts in gas prices. 

“Natural gas is no more profitable business because cost of production is very very significantly higher than current gas prices,” he said. India currently imports half of its natural gas needs and Modi is keen on cutting down import bill by raising indigenous production and ‘Make in India’.