What would have been the gains for ONGC had gas prices been deregulated?
Whether you take fuel oil parity or cost of alternate fuel or regassified LNG, the price is around $3.5 per million British thermal units (mmbtu). We are currently realising $1.1 per mmbtu. Hence, we have lost Rs 10,000 crore this year. My concern is that everybody comments that we are making a windfall gain. I agree. However, I am not a happy man paying Rs 5,600 crore as tax to the Government. Moreover, this year has been abnormal for crude oil prices. What happens when crude oil comes to their normal levels? The last 20 years’ historical data indicates the price could be between $19-21 per barrel. Not surprisingly, the Government is currently not giving us a fair deal on gas prices thinking that ONGC is making a killing on crude prices. What is ONGC’s cost of crude finding and lifting? Our finding cost is higher than the international average. This is not because of inefficiency. It is linked to resource accretion. If we have major finds, the finding cost will come down sharply. ONGC
