India Raises Deepwater Gas Price Ceiling to $9.89 per MMBtu
India has adjusted its natural gas pricing structure, raising the ceiling price for gas from difficult fields like the KG-D6 block of Reliance Industries and BP to $9.89 per million British thermal units (MMBtu), effective October 1, 2026. This marks an increase from the previous $8.90 per MMBtu and applies until March 31, 2027. The new rate targets deepwater, ultra-deepwater, and high-pressure, high-temperature discoveries, which benefit from marketing and pricing freedom but remain subject to government-set ceilings.
The price for gas from legacy fields of state-run ONGC and Oil India Ltd remains capped at $7 per MMBtu. However, the government has set an Administrative Price Mechanism (APM) price of $11.22 per MMBtu for October, with the actual price capped at $7. For gas from new wells in ONGC and OIL's nomination blocks, a 10% premium over the APM price is allowed, bringing the effective price to up to $7.70 per MMBtu.
The higher price for new-well gas aims to incentivize investment in developing additional reserves and boosting production. This pricing mechanism was introduced to encourage investment in India's technically challenging hydrocarbon resources by offering greater pricing and marketing flexibility. The KG-D6 block in the Krishna-Godavari basin is one of India's key deepwater gas-producing areas.
Changes in domestic gas prices impact sectors like fertilizer production, power generation, and city gas distribution, as natural gas is a key feedstock. The government shifted to a formula-linked pricing mechanism for legacy fields in April 2023, with the APM ceiling gradually increasing to $7 per MMBtu by April 2026.