An 18% cut in natural gas prices will discourage further investments in exploring and developing new gas reserves, Moody's said in its Credit Outlook report today.
It said the move is credit negative for producers like ONGC and Oil India Ltd as it will lower their revenues and cash flows.
From October 1, gas prices have been reduced to $3.82 per million British thermal unit (mmBtu) from $4.66 previously on a gross calorific value basis.
"The gas price reduction will have its greatest effect, in absolute terms, on ONGC, the country's largest producer of natural gas.
"At present, we expect ONGC's revenue to decline by about $300 million (approximately Rs 2,000 or 1.2% of total revenues for fiscal 2015, which ended 31 March 2015) for the six months between October 1 and March 31," the global credit rating firm said.
OIL revenues would decline by about $33 million for the same six-month period.
It said the move is credit negative for producers like ONGC and Oil India Ltd as it will lower their revenues and cash flows.
From October 1, gas prices have been reduced to $3.82 per million British thermal unit (mmBtu) from $4.66 previously on a gross calorific value basis.
"The gas price reduction will have its greatest effect, in absolute terms, on ONGC, the country's largest producer of natural gas.
"At present, we expect ONGC's revenue to decline by about $300 million (approximately Rs 2,000 or 1.2% of total revenues for fiscal 2015, which ended 31 March 2015) for the six months between October 1 and March 31," the global credit rating firm said.
OIL revenues would decline by about $33 million for the same six-month period.
