Indian Government Caps Natural Gas Prices 34% Below Global Benchmark - Bloomberg

[hatrack]

Sept. 13 (Bloomberg) -- India capped natural gas prices 34 percent below a global benchmark, cutting returns for Reliance Industries Ltd., and deterring global companies from exploring.

The government yesterday ordered Mumbai-based Reliance, India's biggest company, to sell natural gas from the Krishna Godavari field for $4.2 per million British thermal units, less than the about $4.5 it was seeking. The price will be a benchmark for all producers in the country, the oil ministry said in a statement in New Delhi yesterday.

Lower gas costs ensure subsidized power and fertilizer for farmers, whose votes helped Prime Minister Manmohan Singh form a ruling coalition in May 2004. Regulated prices may delay projects that would ease a shortfall of the fuel, forcing utilities to seek alternative supplies.

``If prices are deemed too low and prevent further exploration and production, then India will have to import LNG or gas through international pipelines to meet growing demand,'' said Cecile Jovene, head of the gas team at Facts Global Energy in Singapore. ``They will have to pay international prices for imported gas.''

EDIT

http://www.bloomberg.com/apps/news?pid=20601091&sid=aTYlWTHHGH3E&refer=india

[amandabeech]

1. Anyone know whether this kind of thing violates the WTO?

Surely it is a breach of free market principles.

Why isn't there a general outcry from the globalists about this and the subsidized fuel in China?

The cheaper it is the more it is used.