Oil & Natural Gas Corporation (ONGC) is expecting to lose about Rs 4,000 crore in revenue and start making cash losses after the government slashed the natural gas prices by a steep 26 per cent by benchmarking it against rates prevalent in gas-surplus nations.
A price of natural gas, which is used to produce fertilizer, generate electricity and gets converted into CNG for use in automobiles and piped natural gas for household cooking, was from April 1 cut to $2.39 per million British thermal unit - a rate about 37 per cent lower than the cost of production. For the company, which produces most of its 64 million standard cubic meters per day of gas from western offshore, the breakeven is around $3.8. The rates are now way below cost.
ONGC is India’s largest government-run corporation and produces about 70% of India’s crude oil and natural gas. The corporation is the biggest public sector commercial organization in India.
