Impact of low crude oil

price on CGD Business

UJJWAL RAO
 Impact of low crude oil price on CGD Business
With respect to natural gas extracted from an oil rig, an decrease in crude oil prices may likely lead to an
increase in associated & non associated gas production which would likely exert downward pressure on natural gas prices.

INDUSTRY
With lower LNG Import price will PNG industrial price be as competitive as alternative fuel?

DOMESTIC CNG
With Low NG price will its popularity With lower NG price will CNG Customers
grow among household? enjoy price cut?
 INDUSTRY
ADVANTAGES
Lower Gas Price
.LNG Import price will be lowered in
Spot Market i.e NON APM Gas will
priced lower for industrial customers.
Long term Contracts
With lower NG price downstream
companies can go into long term
contracts for LNG Imports. Thus setting
a minimum variable limit of gas price to
industrial customers.
Greater Margins for CGD
Companies
As procuring cost of NG is
decreased, this gives opportunity
for CGD Companies to review
their margins against industrial
customers.
DISADVANTAGES
⚫ Due to volatility Spot price might not
remain low for long period of time.
⚫ Due to low crude oil price, prices for
alternate fuel are also reduced because
of refineries procure crude at low price.
(Pet Coke/ FO/Coal)
⚫ Due to such price changes and increase
in demand industries don’t want to go in
long term contracts and keep both options
of NG & Alternative fuel depending on
lower price for consumption.
 DOMESTIC
DISADVANTAGE
ADVANTAGE

Lower NG Price ⚫ LPG price might also be reduced with

. lower oil price.
Customers can enjoy price cut in PNG
Gas.

Recover Transportation Cost

⚫ Alternate fuels like kerosene price is
Lower NG Price reaps more margins
reduced.
which would help recover operation cost.

Increase in APM Gas Supply

Govt incentives and allocation of more ⚫ LPG Subsidies can be increased
APM Gas will help reach more customers
and supply & demands are met.
 CNG
ADVANTAGE DISADVANTAGE

Lower CNG Price ⚫ Alternate fuel price are also reduced.

(Petrol/ Diesel)
. Cost of CNG Price will be reduced. Thus
will attract more buyers

Less Pay back period

⚫ With lower petrol price, petrol vehicles may
Lower CNG price will reap more mileage be cheaper than CNG Vehicle due to less
per/km bring pack back period for CNG demand for petrol vehicle.
Kit down, increasing customer base

APM Gas
⚫ If Demand is not fulfilled CNG Station dry
Govt incentives and allocation of more
out can lead to bad word of mouth
APM Gas will help reach more customers
and supply & demands are met.

More Margins
⚫ With slightest of increase in CNG price
Better margins can help recover OPEX
customers might feel indifferent.
Cost.