On Wednesday, the Union Cabinet approved 'Natural Gas Marketing Reforms' which allow complete marketing freedom for natural gas produced from non-regulated fields, including sale to affiliate companies, as a step towards a gas-based economy.
"The objective of the policy is to prescribe standard procedure to discover market price of gas to be sold in the market by gas producers, through a transparent and competitive process, permit Affiliates to participate in bidding process for sale of gas and allow marketing freedom to certain Field Development Plans (FDPs) where Production Sharing Contracts already provide pricing freedom," the statement released by the Cabinet Committee on Economic Affairs said.
The Cabinet also approved a standard e-bidding procedure to discover the price of gas.
While producers will continue to be barred from participating in such auctions, affiliates would be allowed to bid, Oil Minister Dharmendra Pradhan told reporters.
However, the existing pricing mechanism for gas produced by state-owned ONGC and Oil India Ltd from fields given to them on a nomination basis would continue.
The marketing reform would help add 40 metric million standard cubic metres per day (mmscmd) of production to the existing output of 84 mmscmd, he said.
In February 2019, the government implemented reforms in the upstream sector, giving discoveries and field development plans in domestic gas production approved after 28 February 2019 complete market and pricing freedom.