With LNG becoming an alternative to piped Russian gas in Europe, the UK NBP hub price has declined by 19% in CY14 compared to previous base of 1HCY13 to 1HCY14. “LNG (liquefied natural gas) prices have declined by 35% due to reduction in oil price. Hence, Europe and Russia jointly account for 57% of the weight in pricing hence, a steep decline in these two regions influences Indian gas prices substantially. While HH has a weight of 38.1% in the domestic gas pricing formula, NBP accounts for 42.9%, Alberta Hub Canada has 4.9% and Russian gas has 14.1%.

However, the expected price of $4.8 per mmBtu is merely 14.3% above the original. The price is then calculated as a trailing one year average with a lag of one quarter.Īs a result, the price applicable from the start of November was pegged at $5.61 per mmBtu, 33.6% higher than the earlier price of $4.2 per mmBtu. These prices are taken as weighted averages of the respective volumes of natural gas consumed in these regions. There won’t, however, be any impact on Mukesh Ambani’s Reliance Industries Ltd (RIL), which still earns just $4.2 per unit for gas produced from its flagship D6 field in the Krishna-Godavari basin, since it is locked in arbitration proceedings with the government.Īccording to the formula, the price is calculated based on the annual average of daily prices of international benchmarks-Henry Hub (HH) in the US and National Balancing Point (NBP) in the UK-and the annual average of monthly prices at the Alberta Hub of Canada and Russian gas prices prevailing in the entire erstwhile Soviet Union.

“With lower realizations, we reduce ONGC’s FY15-17E EPS (earnings per share) by 11-20% and downgrade it to Neutral (from Buy)… and OIL by 5-16%,' the report said. Ltd ( ONGC) and Oil India Ltd ( OIL), which jointly account for 70% of India’s gas production. The low gas price is expected to hurt state-owned Oil and Natural Gas Corp.

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