Shares of state-owned oil exploration & production companies, Oil and Natural Gas Corporation (ONGC) and Oil India surged up to 6 per cent on the BSE in Friday’s intra-day trade after the government hiked price of domestic natural gas to $8.6 per metric million British thermal units (MMBtu). The new price, scheduled to take effect from September 1, marks an increase from the current price of $7.85 mBtu.
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Among individual stocks, ONGC has rallied 6 per cent to Rs 184.65, surpassing its previous high of Rs 180.25 touched on August 14. Oil India, too, gained 4 per cent to Rs 283.80 on the BSE. It had hit a 52-week high of Rs 296.95 on August 23.
ONGC is India’s largest exploration and production company, with a consolidated crude oil and gas production of 53 mmtoe in FY23. The ONGC group held 2P reserves (oil &and gas) of 1,221 million tonne of oil equivalent, as on March 31, 2023.
The government plans to increase gas consumption from the current level of 6.5 percent to 15 percent in the primary energy mix by 2030, with the new price regime aimed to boost a gas-based economy.
According to ONGC, under the new gas pricing regime, producers would also receive sufficient protection from unfavorable market fluctuations and incentives to boost production. The present remunerative prices will unlock value, while ensuring a steady and reliable supply of indigenously developed gas to the country’s growing industrial and commercial setup – making that the perfect embodiment of an ‘Atmanirbhar Bharat’ philosophy.
ONGC, further, said that it has been working to revamp its business model, which was once heavily reliant on fossil fuels, and shift towards alternative forms of energy. Over the next decade, ONGC has planned to make significant investments in renewable energy, all the while collaborating with strategic partners to help India and the world at large transition towards sustainability.
Meanwhile, Brent crude prices have increased to over $85/bbl levels (in Aug’23), driven by a steep drawdown in US fuel stockpiles and Saudi & Russian output cuts, which have offset concerns about muted demand prospects from China.
Analysts have raised their 2023 oil price forecasts for the first time in four months with OPEC+ output cuts expected to keep supply tight, offsetting risks to demand from a stalling economic recovery in China, a Reuters poll showed on Thursday.
A survey of 37 economists and analysts forecast Brent crude would average $82.45 a barrel in 2023, up from July's $81.95 consensus. Brent has averaged around $80.6 a barrel so far this year, the news agency reported.