<p>ONGC’s new boss D. K Sarraf has come out in strong support for doubling of natural gas prices from April one, puncturing Aam Aadmi Party’s claim that the cost of production was only $1 and the new prices were inflated.<br /><br /></p>.<p>In his maiden press meet after taking over as chairman of the largest public sector oil producer, Sarraf even said that certain discoveries made by ONGC are not viable even at $8 per million British thermal unit.<br /><br />"Some of the gas may not be produced even at $8. It will be monetised at a later stage," Sarraf said.<br /><br />ONGC is the biggest beneficiary of near doubling of gas price.<br /><br />“ONGC's cost of gas production is about $4 per mBtu and the company hardly made any profit at $4.2 rate, he said. We believe that new price will be around $8 per mmBtu. It appears to be quite significant, but it is not in reality," Sarraf said.<br /><br />He said that ONGC will gain an additional Rs 16,000 crore in revenue because of the new price, which may not be enough to make all its discoveries viable.<br /><br />"Every dollar increase in gas price results in Rs 4,000 crore additional revenue on an annual basis. On a $4 increase, additional revenue would be Rs 16,000 crore and increase in net profit will be Rs 9,600 crore," he said.<br /><br />Most of this additional revenue would flow back to the government in form of higher taxes, royalty and dividend.<br /><br />“It may appear to be a significant increase but more than one-third of the additional income will go back to the government. Our net retention will be Rs 5,200 crore,” he said.<br /><br />Sarraf said higher gas price will make many of its gas discoveries on the eastern offshore viable. <br /><br />The KG-DWN-98/2 and where gas finds were made more than a decade back, will produce 25-30 mmscmd of gas beginning 2017, he said.<br /><br />ONGC Director (Exploration) N K Verma said while the new gas price will make discoveries in KG-DWN-98/2 viable, some in Mahanadi basin block will still be unviable to production.<br />DH News Service</p>
<p>ONGC’s new boss D. K Sarraf has come out in strong support for doubling of natural gas prices from April one, puncturing Aam Aadmi Party’s claim that the cost of production was only $1 and the new prices were inflated.<br /><br /></p>.<p>In his maiden press meet after taking over as chairman of the largest public sector oil producer, Sarraf even said that certain discoveries made by ONGC are not viable even at $8 per million British thermal unit.<br /><br />"Some of the gas may not be produced even at $8. It will be monetised at a later stage," Sarraf said.<br /><br />ONGC is the biggest beneficiary of near doubling of gas price.<br /><br />“ONGC's cost of gas production is about $4 per mBtu and the company hardly made any profit at $4.2 rate, he said. We believe that new price will be around $8 per mmBtu. It appears to be quite significant, but it is not in reality," Sarraf said.<br /><br />He said that ONGC will gain an additional Rs 16,000 crore in revenue because of the new price, which may not be enough to make all its discoveries viable.<br /><br />"Every dollar increase in gas price results in Rs 4,000 crore additional revenue on an annual basis. On a $4 increase, additional revenue would be Rs 16,000 crore and increase in net profit will be Rs 9,600 crore," he said.<br /><br />Most of this additional revenue would flow back to the government in form of higher taxes, royalty and dividend.<br /><br />“It may appear to be a significant increase but more than one-third of the additional income will go back to the government. Our net retention will be Rs 5,200 crore,” he said.<br /><br />Sarraf said higher gas price will make many of its gas discoveries on the eastern offshore viable. <br /><br />The KG-DWN-98/2 and where gas finds were made more than a decade back, will produce 25-30 mmscmd of gas beginning 2017, he said.<br /><br />ONGC Director (Exploration) N K Verma said while the new gas price will make discoveries in KG-DWN-98/2 viable, some in Mahanadi basin block will still be unviable to production.<br />DH News Service</p>
