India raises deepwater natural gas price cap to boost offshore exploration

The Indian government has raised the price cap for natural gas from deepwater and technically challenging fields to $9.89 per MMBtu for the period from October 1, 2026, to March 31, 2027. This adjustment, announced by the Ministry of Petroleum and Natural Gas, aims to encourage domestic exploration by compensating producers for the high costs and risks associated with offshore drilling.

The new ceiling price, up from $8.90 per MMBtu, applies to assets like the Reliance-BP KG-D6 block. Meanwhile, the price cap for legacy Administered Price Mechanism (APM) gas, produced by state-run companies ONGC and Oil India Limited (OIL), remains fixed at $7.00 per MMBtu. This ensures that priority sectors like CNG, PNG, power, and fertilizers are protected from rising input costs.

The government has also introduced a 10% premium for new wells within legacy blocks, setting the price at $7.70 per MMBtu. This incentive is designed to encourage state oil companies to invest in expanding domestic reserves. The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum & Natural Gas issued the new pricing structure.

The policy changes are expected to attract investment in offshore exploration while maintaining affordability for key consumer sectors. By balancing higher prices for challenging fields with controlled costs for legacy gas, the government hopes to boost domestic production without burdening essential industries.