New Delhi 

State-owned Oil and Natural Gas Corporation (ONGC) is likely to see a USD 3 billion (about Rs 23,000 crore) rise in its annual earnings from the more than doubling of the price of natural gas it produces, while Reliance Industries may get USD 1.5 billion (Rs 11,500 crore) more in revenue, a report has said.

The government from April 1 increased the gas price paid to producers of oil and regulated fields from USD 2.9 per million British thermal units to USD 6.10, a record high. For difficult fields, such as deepsea fields of Reliance, the price has gone up by 62 per cent to USD 9.92 per mmBtu.

“A three-pronged deficit in oil markets (inventory, capex and spare capacity) combined with rising domestic gas production after nearly a decade of declines sets the stage for a super-cycle in profitability,” Morgan Stanley said in a note.

Gas accounts for 58 per cent of domestic gas production for ONGC and every USD 1 per mmBtu change in gas price affects ONGC’s earnings by 5-8 per cent. “We foresee USD 3 billion earnings increase in FY23 (April 2022 to March 2023) and, more importantly, improving ROCE to above 20 per cent after more than a decade,” it said.