Most analysts expect India’s move to cut natural gas price to a decade-low to hurt earnings of upstream oil and gas companies, mainly explorers and producers, such as Oil & Natural Gas Corp. Ltd. and Oil India Ltd.
The government has lowered the price of domestic natural gas—used to generate electricity, make fertilisers and as CNG in automobiles—by 25% to $1.79 per million British thermal units, according to the oil ministry’s Petroleum Planning & Analysis Cell. The revised price will be effective from Oct. 1, 2020 till March 31, 2021.
With this, CARE Ratings said, domestic natural gas prices have fallen for the third time in a row, and the rates that will be prevalent in the second half of the ongoing fiscal will be the lowest ever under the new domestic gas policy.
Brokerages also said that any further reduction in natural gas prices may exacerbate the decline in earnings of…