Stay away from gas pricing. That's the cautionary message global energy giants have sent the government. Companies like Chevron, British Gas and Niko have written to the government expressing their concerns on possible price regulation. Global oil exploration firms do not want to see their Dollars flow down the drain! They have asked the government to stay away from gas pricing.

It is learnt that Chevron, Niko, British Gas and Hardy Oil have expressed concerns on the government's move to regulate gas pricing. The oil firms have written that exploration is "risky business" and "hugely capital intensive". Therefore, they say, a market determined price for gas would ensure that fiscal terms are internationally competitive. This they say will encourage foreign companies to invest in India. Given the apprehensions expressed, foreign participation in the forthcoming round of NELP could be disappointing. British Gas, which has invested a billion dollars in India so far, has told the government that it is planning on investing another billion in the next four years.

But it says if changes were made to the production sharing contract and critical provisions such as market pricing for gas amended, the confidence of international companies in forthcoming NELP rounds would be eroded. It’s a view that is echoed by Chevron and Hardy Oil as well. Chevron, which has so far stayed away from bidding for oil assets in India, has told the government that to accelerate the entry of global oil firms such as itself, market forces should be allowed to drive gas pricing.

Niko Resources, Reliance's partner in the KG Basin says,” a sound pricing policy should call for natural gas prices to be based on the fair market value of gas...we are concerned with the recent developments, wherein there is sustained pressure and coercion being exerted on the contractor from various sectors to reconsider such market determined price. We consider such influence to be non compliant with the rights provided to the contractor for marketing of gas at "arms length prices" under the PSC."

The Committee of Secretaries will come out with guidelines on pricing of gas by July end. Investments in exploration now hinge on what the report would entail.