India Raises Ceiling Price for Natural Gas from Difficult Fields

The Indian government has raised the ceiling price for natural gas from difficult fields, such as the KG-D6 block operated by Reliance Industries and BP, to $9.89 per million British thermal units (MMBtu) for the period starting October 1, 2026. This marks an increase from the previous ceiling of $8.90. The new price applies to deepwater, ultra-deepwater, and high-pressure, high-temperature discoveries until March 31, 2027.

Gas produced from these challenging areas enjoys marketing and pricing freedom under government policy, though it remains subject to a ceiling. The higher price is intended to provide relief to producers developing India's technically demanding offshore gas resources, where production costs are generally higher than those from mature onshore and legacy fields.

For gas produced by ONGC and Oil India Ltd (OIL) from their legacy fields, the government has maintained a ceiling of $7 per MMBtu. However, the APM price for October was set at $11.22 per MMBtu, with the actual price capped at $7. For new wells, the government allows a 10% premium over the APM price, bringing the effective price to up to $7.70 per MMBtu. This higher price aims to incentivize investment in developing additional reserves and increasing production.

India follows separate pricing mechanisms for gas from legacy fields and newer discoveries in difficult areas. The government shifted pricing of gas from legacy fields to a formula linked to 10% of the monthly average crude oil import price in April 2023, with a ceiling initially set at $6.50 per MMBtu. The ceiling was raised to $6.75 in April 2025 and reached $7 in April 2026.