State-owned Oil and Natural Gas Corporation (ONGC) is expected to grow its annual revenue by $3 billion this fiscal on the back of a doubling in gas prices, while private sector Reliance Industries Ltd’s earnings may grow by $1.5 billion. Is. Morgan Stanley has expressed this estimate in one of its reports. According to this, a decade-long spurt in domestic gas production, coupled with a three-tier fall in oil markets (reserves, investments and excess capacity), has set in motion a cycle of profit-making for gas companies.
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The government has increased the price of gas to oil producers and regular fields from $ 2.9 per mmBtu to a record $ 6.10 per unit with effect from April 1. The price has been increased by 62 per cent to $9.92 per mmBtu for gas from Reliance’s hard-to-excavate deep-sea areas. ONGC accounts for 58 per cent of its domestic gas production and a change in gas prices of even $1 per mmBtu can change its earnings by five-eight per cent.
According to a Morgan Stanley report, “ONGC’s annual income is expected to grow by up to $3 billion in FY 2022-23. In addition, ONGC’s return on capital is also likely to be above 20 per cent after a decade.” It has risen to the price of $ 9.9. These increased rates will also be applicable on gas originating from ONGC’s KG-DWN-98/2 field.
Gas production from Reliance’s deep-sea KG-D6 block has reached a level of 18 million cubic meters per day and is expected to reach 27 million cubic meters per day by March 2024. The report has estimated that the increase in gas prices will increase Reliance’s annual income by $ 1.5 billion. With this, Morgan Stanley has predicted a further 25 percent increase in gas prices during the next review in October, 2022. also expressed the possibility of This is because four global benchmark gas prices could remain bullish due to short supply. India determines the domestic gas price on the basis of the price of gas in the last 12 months at the four global gas hubs NBP, Henry Hub, Alberta and Russia Gas.