India on September 12 approved with some changes Reliance Industries' pricing formula for natural gas from an offshore block, saying its alterations would result in a price 8.3 percent lower than had been proposed.
The formula for gas from the Krishna Godavari basin may be a benchmark for other firms looking to enter offshore production, and removes an obstacle for India's next auction of oil and gas blocks, which is expected in November after being delayed from August.
Many foreign firms, including BP and Chevron, were waiting on the decision, which could influence whether they commit to investments in a sector where operators have freedom to market gas but pricing requires the government's nod.
The government said its decision would lead to a gas price of US $4.20 per mBtu (million British thermal units) at the delivery point, which it said was equal to 172.20 rupees at the prevailing exchange rate.
"The approved price is 8.32 percent lower than the price proposed by the contractors," it said in a statement. The government said the price formula was valid for five years, from the day Reliance, India's largest private firm, starts commercial supplies.