According to an internal note prepared by the union petroleum ministry, the new gas pricing formula approved by the cabinet would enable exploration and production from around 3 tn cf (trillion cubic feet) of gas reserves.

This would lead to increase in domestic supply of natural gas, the note points out.

The note pointed out that investment in exploration and development plan declined in the last few years because of un-remunerative pricing scenario. The note shows that investment in exploration and development plan consistently declined from $6 billion in 2007-08 to around $1.8 billion in 2011-12.

During the same period, however, Indian companies invested $27 billion in the exploration and production sector abroad and another $10 billion investment is in the pipeline, the note points out.

The present price of $4.2 mmbtu (million metric British thermal unit) has not been found to be feasible and the ministry is not approving the development plan for the lack of commercial viability, the note shows.

In the absence of investments, the note says, domestic gas production has been falling drastically and the present shortfall of 143 cubic mcmd (million cubic metres per day) is expected to increase to 234 mcmd in 2016-17.