ONGC loses Rs 3,000 cr on selling gas below production cost

NEW DELHI: State-run Oil and Natural Gas Corp (ONGC) has lost Rs 3,000 crore on selling natural gas at below production cost in 2008-09 fiscal, company Chairman and Managing Director R S Sharma said.

ONGC sells natural gas from fields allotted to it on nomination basis at Government dictated price of Rs 3,200 per thousand cubic meters or $1.68 per million British thermal unit.

The government has yet to implement an increase in the price of gas that was approved in May 2005, Sharma said. "Under recovery (revenue loss) on gas business will be of the order of Rs 2,500 to 3,000 crore in 2008-09," ONGC Director (Finance) D K Sarraf said.

ONGC, which produced 22.5 billion cubic meters or 60 per cent of the nation's output of gas, asked the government to increase the price of gas produced at fields allocated to it to USD 4 per mmBtu for it to breakeven.

Sharma said the Cabinet had in May 2005 decided to allow market prices for the gas produced by ONGC from new fields. The price that company commands is less than half of the USD 4.205 per mmBtu rate fixed for gas from Reliance Industries Krishna Godavari basin D6 fields.

The Bombay High Court had last week asked RIL to supply gas to Anil Ambani Group firm RNRL at USD 2.34 per mmBtu, price levels which ONGC said were unsustainable for explorers.