Oil and Natural Gas Corporation and Gujarat State Petroleum Corporation are likely to fetch a minimum of 20 per cent premium over the $4.2 per million unit price fixed for Reliance Industries' [Get Quote] gas field.

UBS Investment Research in its latest report estimated that ONGC [Get Quote] and GSPC may get at least $5.5 per million British thermal unit for natural gas they will pump out from their respective Krishna-Godavari basin blocks.

"In India, we do not expect the gas price to reflect the international LNG price, but we do expect at least a 20 per cent increase over RIL's $4.2 per mmBtu for other projects that will come onstream in the early part of the next decade," it said.

RIL is to get a fixed price of $4.2 per mmBtu for gas it would produce from Dhirubhai-1 and 3 fields in KG-D6 block from December-January, for the next five years.

UBS estimated $4.5 per barrel of oil equivalent capital cost for RIL's D6 fields while $5.1 per boe for ONGC's KG-DWN-98/2 and $5.4 per boe for GSPC's Deen Dayal block.

"Based on our estimated $40 billion value for its exploration and production segment, we prefer RIL over ONGC and Cairn India [Get Quote]," it said while fixing a target price of Rs 2,550 per share for the Mukesh Ambani run firm.

For ONGC too it recommended a 'Buy' with a price target of Rs 1,138 and for CIL, UBS saw Rs 337 a share as the target price.

"Considering limited exploration upside in the near term due to its lower focus on NELP blocks, ONGC is our least preferred stock," UBS report stated. 

"We looked at the economics of key emerging blocks. Internal Rate of Return ranges between 31 per cent and 77 per cent after tax by our estimates, and the payback period can be as low as two years from production start for Cairn India's Rajasthan project and three to four years for the gas project," UBS said.

For RIL's NEC-25 gas fields off the Orissa coast that may come into produced within 4-5 years, it estimated a gas price of $6 per mmBtu.

"The key emerging E&P blocks include KG-D6, NEC-25, Rajasthan and KG-DWN-98/2. Each of the four blocks has hydrocarbon in place of over one billion boe and production will start over the next five years," the report said.

"The higher value creation in terms of Net Present Value is clearly dependent on the hydrocarbon resources of the block. KG-D6, with out estimate of $32 billion NPV, is a result of its 40 Trillion cubic feet inplace reserves and exploration prospects."

KG-D6, it said, was likely to contribute $2.5 billion to RIL's cash flow in 2009-10. Cairn's Rajasthan block should generate $3.6 billion from 2010 (with Brent crude oil price at $116 per barrel), it added.