New Delhi, Dec 20 

A day after the cabinet permitted Reliance Industries (RIL) to sell natural gas at a revised price, Petroleum Minister M. Veerappa Moily said higher prices will help raise domestic gas production and help cut imports.

"If you don't raise gas price, no domestic production will come and dependence on imports will increase," Moily said at the All India Management Association's (AIMA) 3rd PSU Summit here Friday.

The government had, in June, approved a new formula for pricing of all domestically produced natural gas effective April 2014, when the new price will be about $8.4 per million British thermal units as against the current $4.2 mbtu. The Cabinet on Thursday allowed the same price to RIL's currently producing fields in KG-D6 block subject to its giving a bank guarantee.

The bank guarantee, which will be around $9 billion, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1 and D3) fields in the eastern offshore KG-D6 block.

India's hydrocarbon potential, the petroleum minister said, requires a lot of money to exploit.

“You need to spend a lot of money on technology to access the hydrocarbon and research,” Moily said.

India, which imports around 50 percent of its gas needs, “may end up importing hundred percent if we don’t encourage exploration”, Moily added.