was among the top losers in Sensex stocks, falling 4 per cent in intra-day trade before closing 0.2 per cent down.
ended with a loss of 1.2 per cent, even as the Sensex rose 1.65 per cent on Thursday.
Further, the ceiling price for gas to be produced from difficult fields, too, was cut 27.6 per cent to $4.06 from $5.61 MMBtu, and might discourage exploration and production activity. These prices are lower than spot prices of gas, which, despite being highly volatile, stand at $5, say analysts.
Depending on the location of the gas field, production cost for upstream players may vary. As a result, a fall in natural gas prices will either cripple profits or lead to losses, if the production cost is higher than realisation, observes CARE Ratings. Unless the government decides on the proposal of a ‘floor price’ (significantly higher than the latest price announced), city gas distributors and end-user industries such as fertiliser, power, and ceramics will benefit.
Indraprastha Gas, Mahanagar Gas, and Gujarat Gas rose 1-4 per cent on Thursday. For the fertiliser industry, 28 out of 31 plants use natural gas as feedstock and lower gas prices will help them cut the cost of urea production by 12 per cent and also lower subsidy requirements.