JAIPURIA INSTITUTE OF MANAGEMENT A PROJECT ON MANAGERIAL ECONOMICS SUBMITTED BY:- ROMANA AFTAB HEENA KUMARI ANSHU AGGARWAL KANAK KUMARI SATYAM KUMAR NILANSHU PANDEY
INTRODUCTION Natural gas is one of the most abundant energy resources on the planet, yet more than one-third of global natural gas reserves remain stranded and undeveloped. 70% of gas traded internationally is exported by pipeline; 30% by liquefied natural gas (LNG). Alternative technologies have been refined and developed in recent years but are yet to make serious inroads into the challenges of developing remote gas fields
TECHNOLOGIES AVAILABLE TO TRANSPORT NATURAL GAS LONG DISTANCES
CURRENT PRICING MECANISM IN INDIA Pricing of gas- Administered price mechanism In Xth plan, under APM-gas from nominated ONGC & OIL fields priced uniformly at Rs.2,850/(SCM). uniformly for all customers except in North East, wherein the customers were charged a price of Rs.1700 per 1000 SCM With effect from 1.7.06, the gas pricing for APM gas was changed. all available APM gas would be supplied only to the power and fertilizer sector consumers. All other consumers would be supplied natural gas at market related price subject to a ceiling of ex-Dahej RLN. Free market gas -JV/Private sector, re-gasified LNG etc.
DEMAND SIDE ISSUEOn the demand side, the challenge is to perform atransition to prices closer to market prices whilemaintaining the consumer’s competitiveness. Thisprice, more than twice the former APM price levelfixed by the government, has unsurprisinglybecome a reference point. Being a private sectorcompany, RIL cannot sell gas at under cost;therefore their clients have to be able to pay cost-plus for any of their gas. Indeed gas availability andaffordability for customers are crucial for gasdevelopment in India.
SUPPLY SIDE ISSUEFrom the supply side, keeping artificially low APMprices often sends the wrong signals: indeed, gasprices have to be high enough in order to attractupstream investments, and cover production costsand the recovery of capital in order to limit under-recoveries from PSUs.These, unsurprisingly, complained that low priceshad been resulting in substantial losses for them.