ONGC logs Rs 4,000 cr loss on gas production

State-owned Oil and Natural Gas Corporation (ONGC) logged a Rs 4,000 crore loss on natural gas output in the fiscal year ended March 31, 2018, as the government mandated price for the fuel was less than the cost of production.

“We need at least $4 per million British thermal unit to break-even as compared to current gas price of $3.06 per mmBtu,” a senior company official said.

As per a new mechanism approved by the government in October 2014, the price of domestically produced natural gas is to be revised every six months - April 1 and October 1 - using weighted average of rates prevalent in gas surplus markets like Henry Hub (the US), National Balancing Point (the UK excluding Russia), Alberta (Canada) and Russia.

Using this formula, the price for April to September came to $3.06 per mmBtu, as compared to $2.89 in previous six months.

Prices have been less than $4 since October 2015.