New Delhi: After the crude oil surge, global gas price is expected to soar this year.
Domestic price are expected to more than double to $6.6-7.6/million BTU in 1HFY23E. This from the current level of $3.2/million BTU available during 2HFY22.
“We compute a steep increase in domestic gas price to US$6.6-7.6/mn BTU for 1HFY23E. This is driven by the recent steep increase in global gas prices. Higher futures curve are anticipated in the coming months,” KIE said in its report.
Benchmark gas prices have increased further in September 2021. The Henry Hub gas price increasing to $5.1/mn BTU from $4.1/mn BTU in August. UK NBP jumped to 15.4 pounds/mn BTU from 10.9 pounds/mn BTU in August.
Moreover, Alberta hub gas price also increased to $3.1/mn BTU from $2.8/mn BTU in August ($2/mn BTU used in the calculation for 2HFY22 prices).
Asian spot LNG prices increased further to $22.8/mn BTU from $16.7/mn BTU in the previous month.
Higher gas prices means higher cost of transportation and cooking fuel for consumers. While the CNG margins are steady in September, a price hike of Rs 5-7/kg is required.
IGL had undertaken a price hike on August 30 to mitigate higher cost of incremental LNG that it had to use for its CNG segment given capping of domestic gas allocation at 110 per cent of CNG consumption in 2HFY21.
“We note that IGL and MGL will be required to take price hikes of around Rs 5-7/kg to pass on the impact of higher domestic price in 2HFY22,” KIE said.
