A whole lot of gas

No one should be surprised Arvind Kejriwal and crew claim to have found dirty deeds done quite expensively in the natural gas sector in India. This is not because Kejriwal has proven anything. Though his anti-corruption campaign is a necessary shakeup to a complacent elite, when it comes to economics, this self-styled socialist sounds like a cross between Mamata Banerjee and Sitaram Yechury.

There may well be some funny games going in between Reliance and the gas ministry. Kejriwal hasn’t proven anything. But what he has highlighted – as did the comptroller auditor general before him – was that the pricing of natural gas in India is so complicated that it is easy to claim it is derived from corruption. And equally valid to claim it is an honest price, as based on existing government policy, as Reliance claims.

The point is no one can tell.

Natural gas in India doesn’t have a price. It has, at last count, 27 different prices. If one were to include differences created by state or local levies, transport costs, and whatnot I suppose the variations would number in the hundreds.

Gas is priced absurdly in India because it was put together in a time when the market for this fuel was regional if not local. It was derived from a time when domestic production was minimal and imported supplies difficult.

It also reflected a balancing act between commercial and political interests. Electoral compulsions meant gas at low prices for fertilizer and power production. Commercial compulsions required regular and rich profit margins: natural gas is extremely capital intensive with billions needed for infrastructure. This is why 20-year contracts are common in the gas sector. Getting back that sort of investment requires guaranteed supply.

The variation in Indian gas prices is tremendous with many different clusters of gas prices: cooking gas (which is largely imported and the prices are internationally fixed), fertilizer and power (both subsidised), and the prices that are negotiated for much of the gas found by domestic exploration (like KG-D6).

The variation in price is enormous. India imports Russian gas at over $ 10 mmbtu. It is getting the first shiploads of US shale gas at $ 3 mmbtu. The gas used for power and fertilizer is in the $ 6 mmbtu. KG-D6 is presentl $ 4. But what is common in all of these is that the user price is set by the government which makes it inevitably politicized. And it leads any oil and gas firm to turn to pressuring the political leadership to make changes in the prices.

Since politicians will try to make prices as low as possible for their voters, the end result is overly low prices and underinvestment in the Indian gas sector. And Indian gas prices are low. Until 2009, India’s administered price mechanism price for gas was about one-seventh or one-eighth that of the European standards, UK Heren NBP and the EU cif (measured in dollar/oil tonne equivalent). Which is why I am very cautiously sympathetic to the arguments of Reliance and other private producers (though Reliance’s demand for $ 14 mmbtu seems high). Indian gas is still lower then those two standards, but what has become cheaper is Henry Hub.

Henry Hub is the US natural gas benchmark price (like Brent Crude for oil). This used to be about five or six times higher than India’s price. Then shale gas came along and Henry Hub has dropped through the floor. In 2010, it fell below the Indian average price.

In theory, this should provide India an incredible opportunity. India could import US and Canadian gas at $ 2 or 3 mmbtu, driving both Reliance and Russia and Qatar to lower their prices. It could let gas prices in the country be market based. Power, fertilizer and the works could be much cheaper as a consequence.

What’s the catch? The answer goes back to what was said earlier: gas is capital intensive. India simply doesn’t have the infrastructure to import so much gas. It has only two gasification terminals and its pipeline network is primitive. This requires money, and lots of it. But that money will be hard to find if prices are low and the gas market is so politically controlled.

A real gas solution would seek to exploit the present international low prices to keep domestic prices in check, yet provide domestic and international investors sufficient incentive to invest in the needed gas infrastructure. This should produce a virtuous cycle: more investment would mean cheaper gas, would produce more investment. Sadly, neither the government nor Kejriwal nor even Reliance is working to that end.

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  • Anoop Purushottam

    Miss Anandan,i am afraid you have taken your skirmish with the followers of Dr.Ambedkar on your train journey a little too much to your heart.While,I entirely sympathise with you for your ordeal,I think it will be stretching your anger for the dalits a bit too far if the idea is to paint the Dalits as the perennial villians,as your write-up seems to suggest.The examples and instances you have mentioned are shamelessly one-sided.While,the Dalits literally hijacking trains during the week having the date 6th of December maybe true,but to connect it with a 60 lakhs robbery is not only dangerously prejudiced(without having any logical connections establishing what you seem to suggest) but it also brings out your basic instincts which I am afraid are genetic to India’s deeply biased media.Plz do not make an excuse of your personal experience to vent your genetic ire on the Dalits.On whatever counts you have faulted the Dalits in your write-up,I would like you, to put any other community in thier place in our country especially during thier religious possesions or rituals and you will get your answers.Ofcourse,only if you want to seek honest answers.What happens during Kumbh mela,Kawariyas ?? How is the conduct of the Shiv Sainiks during Ganesh Chaturthi etc???As for Arun Shourie and his “historic pornography”(as one eminent journalist rightfully named)”Worshipping false Gods”, I would like to bring to your kind notice that there are atleast, 20 plus logical rebuttals from Dalit intellectuals in book form.Also, on Prakash Ambedkar declining to respond to Shourie,I think you have conveniently interpreted it as Prakashji’s lack of courage and substance in doing so,which again is outrageously preposterous an assumption to make.Plz understand that there have been in English,Hindi and Marathi newspapers, a minimum of 300 plus rebuttals for Arun Shourie and very logical at that.After this,I do not think there was any need for Prakashji to engage with Shourie on this count.But still just a question(since your columns has raised the issue),if indeed Shourie thinks that by siding with the British,Dr.Ambedkar proved himself a traitor,why does he not extend his research to RSS and its contribution to the Independence movement???.If done honestly by Shourie(and without resorting to selective trickery that he employed for Dr.Ambedkar), I think we will have a whole assembly of false gods.Also, your closing comment that not everyone can be like Shourie, is terribly true.Indeed,nobody can be so blinded in his single minded pursuit to further his cause and career that the elementary of there being a “other side” seems to have been conveniently jettisoned by Shourie always.I am not surprised therefore, that your write-up above is a glowing tribute to the Arun Shourie style of journalism and thinking too!!


  • https://me.yahoo.com/a/NJgNuLUmq5Itz8Qd3ypKBXkOQ8Uh#8a5a0 ashok

    Fine piece, Sujataji. Given the elemental passions that lurk just beneath the surface of our subnational identities, maybe we should have used the last sixty odd years to harmonise society rather than accentuating the differences as the raw material for electoral politics. The explosions, when they come, will not be gentle.


  • http://openid.aol.com/ctripathy chandrika

    Great article.


  • http://pulse.yahoo.com/_URSXATBEMZ7HUAB3OH36PLYWDM Ashok

    There is a good case for the PM to retain Finance till the end of this government’s term. It signals to the world and, more importantly, the electorate that the economy is now on top of the party’s / government’s mind. Without the rates of growth and inflation changing places, the columnist will not have to stick his neck too far out to predict the outcome of the next general election.


    At Cheruti Reply:

    And let’s hope that he does not just hold the portfolio but actually liberalizes the economy.


  • Dr. P.K. Jha

    Vir Sanghvi is bereft of ideas. At the same time, he wants his name in print, so he decided to indulge in political prophecy that is patently meaningless and unsophisticated.


  • ved

    Vir Sanghavi is wrong to claim that there is no logic in politics.The vote-bank logic works here.Muslims will vote to defeat BJP.Dalit will vote for Bahnji.Yadavs wil vote for Mulayam pahlvan. People like me will vote for Congress.Aam Admi will vte for a bottle and 500 rs. This is logic.


  • http://pulse.yahoo.com/_7XVK6BRUJHTBJCDMA6YSIFBUBE Suresh BV Bharadwaj

    Within a few days of taking charge of the Finance Ministry, the Asian Indian Aryan, Dravidian, Mongolian & Australoid Hindu, Sikh, Shinto, Tao, Confucian, Buddhist & Jain PM Manmohan Gurmukh Amrit Kaur Singh has proved that he is a quick action taker, a decisive leader & a good performer. Dr. Singh delivers spectacular results if he is in total control & others are not micro-managing him or placing roadblocks. When the fish, chicken & mutton eating RSS Brahmin Atal Bihari Shyam Krishna Vajpayee was the PM, BJP stood solidly behind him & allowed him complete freedom both in the government & the party. When PV Narasimha Rao was the PM, he too called all the shots in the administration & Indian National Congress party. Likewise, Jawaharlal Nehru, the son of the chicken, beef & pork-eating Motilal Nehru was the PM, he faced no internal dissensions either in the government or in the party. Of course, the Non-Aryan European British Greek Christian Edwina Mountbatten kept a tight control over Jawaharlal with the help of Remote Body Area & Mind Control Networks & made him to write to her every day about the affairs of India. Likewise, the converted Christian & fish, pork, chicken & mutton eating Rajiv Roberto Iranian Parsee Shia Muslim Firoz Jehangir Nawab Khan Ghandi faced no challenge to his powers, both in the administration & party from any of the Indians; however, the role played by Edwina Mountbatten when Jawaharlal Nehru was India’s PM, was played by the Non-Aryan European Italian Roman Catholic Christians Sonia Edwige Antonia Albina Roberto Maino, Mascali Ottavio Quattrocchi & Swedish AB Bofors Howitzer Corruption Commission Paying Gun in Rajiv Gandhi’s PM & personal lives. In the case of fish, chicken & mutton eating Indian PMs – Jat Charan Singh, Vokkaliga HD Deve Gowda, Kshatriya Chandra Shekhar, Pakistant-export IK Gujral & Kshatriya VP Singh, the Indian National Congress constantly breathed down their necks, never allowed them to breathe freely & under-cut their powers in decision making, appointments & administration. The fish, chicken & mutton eating Kayastha Brahmin Lal Bahadur Shastri took complete control of the Indian mind & administration with his clean, effective & Jai Jawan & Jai Kisan administration until he was poisoned to death by bad & malignant elements. The ablest, strongest, most patriotic & meat eating PM Indirani Priyadarshini Gandhi had complete control over both government administration & party management but her closest & ablest son Sanjay Gandhi was cruelly killed by her detractors. Similarly, his own urine drinking Gujarati Brahmin Morarji Desai stood his ground well, though he was a little weakened because Nanaji Deshmukh refused to become the Industry Minister & opted out of politics because of his differences with AB Vajpayee & LK Advani & because Madhu Limaye constantly attacked RSS support to his government. It is time the eggs, fish, chicken & mutton eating Manmohan Singh is made the Indian National Congress President & allowed to serve India as an able, amiable, honest & results-giving Indian PM. Jai Azad Hind! Jai Hind! OM!


    vijay ! Reply:

    Bhardwaj ji … I think you should start a culinary column…


  • vijay !

    The only sensible prediction we can make is that decent gentleman Man mohan wont put up his had for 2014, while Digvijay SIgh may turn out to be the Digvinash Singh of Congress if he is allowed to open his mouth too much.


  • ppc baiter

    PP Chaudhuri is full of hot gas “if you will.” Mr. Baritone doesn’t have the critical thinking skills to come to worthwhile conclusions. Moreover he doesn’t have the balls to take a stand on its merit for fear of the hidden hand that might part him of his daily daal roti.


  • Deluxe Hotel in Bhubaneswar

    One of the lovely hotels in bhubaneswar with very good hospitality and glorious accommodation….


  • Bobby

    If KG basin Gas price is to decided by government, how come reliance bid for gas supply contract of NTPC. And how come Mukash Ambani entered into agreement with Anil Ambani to sell him Gas at same price as NTPC. How come government remain silent during all this time. And how come government decided that it will fix the price only when Anil Ambani won in mumbai high court and NTPC also moved court.


  • Rahul Vincci

    Mr.Zia you should be ashamed on such reporting, a biased bullCR**. The Brtishers gave the Muslim political asylum, and what your community is doing ? bombed London Subway to create terror to the common British people to force them to accept Sharia. What if the British kicked out all the Muslim for their intolerance and disrespect for the British culture and system. your community will then beg mercy to stay but once in your Muslim community would force them with threat of terror to accept Sharia. The same thing going on in India. If you love so much your medieval cave Muslim culture then get out of India and go back to Pakistan.


  • nirode mohanty

    Please do not give space to terrorists. They should be a part of the mainstream.
    Else, they should go to a Muslim country.


    rao Reply:

    Key accused
    (1). Lt. Col. Prasad Shrikant Purohit (37): He is the brain
    behind the Sept.29, 2008 blasts and the man that held it all together. He was
    the founder and one of the chief fund-raisers of the Pune-based organisation,
    Abhinav Bharat. He is also accused of procuring the RDX that was used in the
    blast. (He was arrested on Nov.5, 2008).

    (2). Sadhvi Pragya Singh Thakur (38): Her bike was used to plant the bomb in
    Malegaon, and she is accused of engineering the blast. She has a Masters in
    History, and became a sadhvi in Jan.2007. (She was arrested on Oct.23).

    (3). Rakesh Dhawde (35): Dhawde, an arms expert, has been booked for four
    previous bomb blast cases. He provided the required weapon training and supplied
    arms to Purohit. (He was arrested on Nov.2, 2008).

    (4). Swami Dayanand Pandey alias Shankar Acharya alias Sukhakar Dwuvedi (40):
    He can be seen as the key point man and is said to have been present at the
    meetings held in Bhopal, Pune and Faridabad before the Malegaon blasts. He is
    also accused of conducting meetings with the other accused. Prior to his arrest,

    ran two ashrams in Kanpur and Jammu and Kashmir. (He was arrested on Nov.14,

    (5). Retd. Maj. Ramesh Upadhyaya (64): A resident of Akurdi, Pune, he worked
    with the military’s intelligence unit, and is suspected to have provided the
    training required for procuring and assembling the bombs. (He was arrested on
    Oct.28, 2008).

    (6). Ajay Rahrikar (39): He was the treasurer of the Abhinav Bharat, and a
    part of the fund-raisers group. He paid Rs. 2.5 lakh to Swami Dayanand Pandey
    prior to the blast. (He was arrested on Nov.2, 2008).

    (7). Jagdish Mhatre (40): A habitual criminal and an accused in a murder and
    an extortion case in Kalyan and Thane, he is believed to have paid Dhawde for
    the weapons. (He was arrested on Nov.2, 2008).

    (8). Sameer Kulkarni (32): A former member of the Akhil Bharatiya Vidhyarthi
    Parishad (ABVP), he was employed at a printing press. He is suspected to have
    supplied the chemicals used in the bomb. (He was arrested on Oct.28, 2008).

    (9). Sudhakar Chaturvedi (37): Originally a resident of Mirzapur in UP,
    Chaturvedi was picked up from Deolali where he stayed in a rented room. He is
    accused of conspiracy; the bomb was assembled in his house. (He was arrested on
    Nov.4, 2008).

    (10). Sham Bhanwarlal Sahu (42): He is suspected to be one of the bomb
    planters. A commerce graduate from Christian College in Indore, Sahu has a
    mobile phone shop and also acted as a realty broker. He is also accused of
    abetting the blasts and conspiracy. (He was arrested on Oct.23, 2008).

    (11). Shivnarayan Kalsangra Singh (36): A BSc graduate, Singh is seen as a
    “mechanical and electrical” expert by the ATS. He is suspected to have assembled
    the timer device while making the bomb. (He was arrested on Oct.23,


  • engrich
  • Anonymous

    UK becoming multi cultural is a good thing. Global acceptance of all forms of Islam including athiestic Sufi Islam is welcome. However they should take care not to bend to Mullas and get Sharia in their legal system. Neither should the fair minded British abandon the hapless Muslim women in name of multi faith.

    It would be in fitness of things if Saudi Arabia also learns from Britain and encourages mutli faith churches and temples.

    I would love to hear the peal of Church bells or the cry of “Jo bole so nihal…” in the streets of Riyadh, Jeddah and Mecca…


  • engrich

    Of the Ibrahimic faith in ONE God, Islam is the most liberal of the three,
    history is the evidence when non-believers pagans were annhilated in Europe,
    Africa and Americas by christian armies, whereas, the Persians, Ottomans and
    Moghul empires encouraged coexistance wherever they ventured. In Pakistan and
    several other muslim countries including Syria, Saudi Arabia and the Gulf states
    it is the absence of a dialogue in their societies which encourages radicalism
    and violence. one would think that the liberals in the media should be in the
    forefront to encourage a dialogue which could improve the tolerence among
    various factions and ethnic divide.

    Noth personal, just the views of an observer


    Anon Reply:

    Chutiya — aur koi kaam nahe hai bhosdike ?


  • Anonymous

    engrich– ‘whereas, the Persians, Ottomans and Moghul empires encouraged coexistance wherever they ventured’ NOT COMPLETELY TRUE

    And when you say- ‘ In Pakistan and several other muslim countries including Syria, Saudi Arabia and the Gulf states it is the absence of a dialogue in their societies which encourages radicalism and violence.’ HOW VERY TRUE
    Onus is on us muslims to integrate and adapt everywhere- will take our quom 25 years to improve image after 7/7, 9/11


    engrich Reply:

    engrich– ‘whereas, the Persians, Ottomans and Moghul empires encouraged coexistance wherever they ventured’ NOT COMPLETELY TRUE.


    in dubai idgah,2 hindu temples nad gurudwara are in same compound.

    tipu palace was within few yards of main temple of that area.

    ayodhya was owned by persian nawabs,they donated land to present temples.land for golden temple was donated by muslims.muslims were great asset whereever they go.muslims built the best cities and road.our arrival on indian sucontinent was a gift to indians.for the first time all indians were equal before law…………………………………………………

    Onus is on us muslims to integrate and adapt everywhere- will take our quom 25 years to improve image after 7/7, 9/11

    sept 11 &7/7 were zoinist act.building with 20000 tonnes of steel cannot fell in 57minutes.a passenger plane cannot dodge 62 best fighters of world on pentagon,walk on runway and disapeared with passengers after killing 400 working inside.use your mind.regarding 7/7 owners of courier companies in london are mostly jews.poors young lads were not knowing what they were carrying,one of them was recent convert had 3 months baby.26/11was joint operation of rss and cia.

    islam is peaceful religion muslims are victims of international terrorism.
    power is only awnser.weak is always bad.ghussa hamesha weak par ata hai.now isreal is defeated by arabs for 3rd time.their tone has changed.


    engrich Reply:




  • engrich
  • Bala Varadarajan

    True and well said. Now how about Islamic countries also Show tolerance and allow other religions to flourish in their lands. Please stop preaching to the civilized nations about how to practice tolerance. Please direct your comments to the uncivilized nations I.e which have Islam as the state religion. While you are at it please also command the Muslims to take back the religion from the extremist Mullahs


    engrich Reply:

    who is not aware that todays elite uiversities in the anglo saxon world icluding
    Oxford, Cambridge and Harvard were first set up as Madrassas, the schools of
    theology? The subjects of philosophy and sciences were later added as in main
    Europe from the knowledge which the Arab and jewish scholars brought


    engrich Reply:

    True and well said. Now how about Islamic countries also Show tolerance and allow other religions to flourish in their land
    they are doing this is part of our religion.u brhmn people dont allow other religion to flourish.ashok built 60000 temples in orrisa later demolished by brmns when budhdhist become.babri demolition is latest example.even vaishlte never allow shaivite to survive.u make wrong history then use it as stick to beat others.


  • engrich

    NEW DELHI: Ninety per cent of Indians are “idiots” who can easily be misled by mischievous elements in the name of religion, Press Council of India (PCI) chairperson Justice Markandey Katju claimed on Saturday.

    say ninety per cent of Indians are idiots. You people don’t have brains
    in your heads … It is so easy to take you for a ride,” he said at a

    He said that a communal riot could
    be incited in Delhi for as meagre an amount as Rs 2000. He said that
    all somebody has to do is make a mischievous gesture of disrespect to a
    place of worship and people start fighting each other.

    “You mad people will start fighting amongst yourself not realizing that some agent provocateur is behind this,” he said.

    Katju said that before 1857 there was no communalism in the country but the situation was different now.

    80% Hindus are communal and 80% Muslims are communal. This is the harsh
    truth, bitter truth that I am telling you. How is it that in 150 years
    you have gone backwards instead of moving forward because the English
    kept injecting poison,” Katju said. “The policy that emanated from London after
    the mutiny in 1857 that there is only one way to control this country
    that is to make Hindus and Muslims fight each other,” he said.

    said that then there was propaganda that Hindi was the language of
    Hindus and Urdu of Muslims. “Our ancestors also studied Urdu, but it is
    so easy to fool you. You are idiots so how difficult is it to make an
    idiot of you,” Katju said.

    Katju said that he was saying these harsh things to make Indians, whom he loved to understand the whole game and not remain fools.