The Cabinet Committee on Economic Affairs (CCEA) approved the formulation of a standard procedure for the market price discovery of gas across various contractual regimes on October 7, 2020. Further, a standard e-bidding mechanism will be proposed by the Directorate General of Hydrocarbons for ensuring transparent and competitive discovery of market price of gas.
In addition to wooing investors in the exploration and production of natural gas, the development is expected to help the country to realise its dream of a gas-based economy. Besides, it would also help to increase the domestic gas production by an additional 40 million standard cubic meters a day, permit affiliates to participate in bidding process for gas sale and give marketing freedom to certain field development plans wherein production sharing contracts already provide for pricing freedom.
However, the mechanism will not be applicable for production from blocks awarded on a nomination basis, governed by a formula announced in October 2014. The former formula uses the weighted averages of prices in the three major international gas trading hubs of US Henry Hub, the UK National Balancing Point and Japan’s custom-cleared rate.