A compressed natural gas (CNG) pressure gauge is seen on a fuel bowser an Indraprastha Gas Ltd. gas station in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

ONGC Expects Gas Business To Turn Profitable After Next Price Revision

India’s largest oil company expects its loss-making gas business to break-even after the revision in natural gas procurement prices.

The natural gas procurement price was increased to $3.36 per million British thermal unit from Oct. 1 for domestic producers, according to a Petroleum Planning and Analysis Cell’s circular.

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 (U.S.), National Balancing Point (U.K. excluding Russia), Alberta (Canada) and Russia.

“We will probably turn profitable with the next gas price revision, when it happens,” Chairman and Managing Director Shashi Shanker. Natural gas constitutes around 45 percent of ONCG's total crude oil and natural gas production volume. It produces around 75 percent of the country's natural gas output.

The oil and gas major also expects to become debt-free in the next couple of years if the crude prices remain at current levels.

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With inputs from PTI