Bulletin: India's Cut In Natural Gas Prices Will Discourage Investment In The Sector; ONGC, Reliance Industries Ratings Unaffected

SINGAPORE (Standard&Poor's) Oct. 1, 2015--Standard&Poor's Ratings Services said today that the Indian government's decision to cut natural gas prices by 16% will discourage oil exploration and production (E&P) companies from committing new capital expenditure (capex). It will also add economic uncertainty to their ongoing investments. However, the impact on the cash flows of Oil and Natural Gas Corp. Ltd. (ONGC; BBB-/Stable/--) and Reliance Industries Ltd. (BBB+/Stable/--) will be minimal. The ratings on the companies are therefore not affected. According to the government's formula-driven gas pricing, the price for domestically produced natural gas on a net calorific value basis is set at US$4.24 per million metric British thermal unit (mmBtu) for the six months starting Oct. 1,

...SINGAPORE (Standard & Poor's) Oct. 1, 2015--Standard & Poor's Ratings Services said today that the Indian government's decision to cut natural gas prices by 16% will discourage oil exploration and production (E&P) companies from committing new capital expenditure (capex). It will also add economic uncertainty to their ongoing investments. However, the impact on the cash flows of Oil and Natural Gas Corp. Ltd. (ONGC; ###-/Stable/--) and Reliance Industries Ltd. (###+/Stable/--) will be minimal. The ratings on the companies are therefore not affected. According to the government's formula-driven gas pricing, the price for domestically produced natural gas on a net calorific value basis is set at US$4.24 per million metric British thermal unit (mmBtu) for the six months starting Oct. 1, 2015, down from US$5.18 a unit earlier. We believe the government's plan to stimulate private sector participation and bring in transparency in gas pricing by introducing formula-driven gas pricing is well...

Bulletin