Gas prices have been consistently moving higher. In an interview with CNBC-TV18, Valery Chow, vice president of Wood Mackenzie, and P Elango, managing director of Hindustan Oil Exploration Company (HOEC), spoke at length about the move and the key reasons behind it.

First up, Chow said there is much more interest in gas consumption which is pushing the gas price higher.

“There is continuous, strong Asian demand, both pre-pandemic (COVID-19) and post-pandemic; and bear in mind that Asia constitutes 75 percent of the global liquefied natural gas (LNG) demand,” he said.

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Chow further said that coal and crude have pushed the gas prices higher in Europe.

According to him, there will be some moderation in gas prices in 2022. “We anticipate that high prices are here to stay for a while and we expect some moderation in the spring of next year,” Chow said.

Meanwhile, Elango said that increase in domestic price to USD 4/mmbtu will be helpful. “An increase in domestic prices closer towards USD 4 range would help both the consumers as well as the producers,” he said.

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“We are the operator of a major gas field called Dirok in the northeast region, where we hold about 30 percent interest, that field is producing about 1 million cubic meters of gas per day. So, 1 million cubic meters is about 35,000 mmbtu per day. So, USD 1 increase means about USD 35,000 increase in revenue per day. So, other than the royalty, which is about 12.5 percent, the rest of the revenue would flow towards the bottomline,” Elango said.

For the entire discussion, watch the video

(Edited by : Dipika Ghosh)