By Nishit Shukla NEW DELHI: The petroleum ministry has asked the Director General of Hydrocarbons (DGH) to work out a transparent formula for determining premium for gas produced from challenging deepwater, ultra-deepwater or high temperature, high pressure discoveries and from government sources. said.

The government had previously announced that gas would be priced according to an international benchmark formula, but a premium would be allowed for gas found in exploration and drilling areas. It is both expensive and challenging. The company said it would consult experts later to determine the premium.

“We have asked DGH to come up with a transparent formula to calculate the premium for these new discoveries and DGH has to decide whether to increase the premium or not. We’ve asked DGH to come up with a transparent formula to calculate the premium. As follows: we have asked them to come up with a formula, either based on the existing Gas price formula or the existing Gass for price as a percentage, and they will devise a completely new formula, which we have completely given them. They have to submit it by the end of December, a government official told The Economic Times.

Under the new formula, gas prices will start at $ 4.20 and rise to $ 5.61, but will reward rugged terrain. A senior official of the technical department of the oil ministry DGHH said that the issue is complex and experts will be consulted as the DGH is not involved in drafting the gas pricing formula. “DGH sets up a committee to investigate and may engage international consultants to work out a plan.”

Following the Cabinet’s approval of the new plan, the oil ministry said it would seek stakeholders’ views on the three types of premium determination and pricing mechanisms. The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) said the premiums will be determined through a transparent process and the government will address concerns about the randomness of the process.