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ONGC, GSPC to get higher price of gas

This article was posted on Oct 13, 2008 and is filed under Stock News

State-run Oil and Natural Gas Corp and Gujarat State Petroleum Corp are likely to fetch a minimum of 20 per cent premium over the USD 4.2 per million unit price fixed for Reliance Industries’ gas field. UBS Investment Research in its latest report estimated that ONGC and GSPC may get at least USD 5.5 per million British thermal unit for natural gas they will pump out from their respective Krishna-Godavari basin blocks.

“In India, we do not expect the gas price to reflect the international LNG price, but we do expect at least a 20 per cent increase over RIL’s USD 4.2 per mmBtu for other projects that will come onstream in the early part of the next decade,” it said.

RIL is to get a fixed price of USD 4.2 per mmBtu for gas it would produce from Dhirubhai-1 and 3 fields in KG-D6 block from December-January, for the next five years.

UBS estimated USD 4.5 per barrel of oil equivalent (boe) capital cost for RIL’s D6 fields while USD 5.1 per boe for ONGC’s KG-DWN-98/2 and USD 5.4 per boe for GSPC’s Deen Dayal block.

“Based on our estimated USD 40 billion value for its exploration and production (E&P) segment, we prefer RIL over ONGC and Cairn India,” it said while fixing a target price of Rs 2,550 per share for the Mukesh Ambani run firm.

For ONGC too it recommended a ‘Buy’ with a price target of Rs 1,138 and for CIL, UBS saw Rs 337 a share as the target price.

“Considering limited exploration upside in the near term due to its lower focus on NELP blocks, ONGC is our least preferred stock,” UBS report stated.

source: financial express

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