India raises gas price ceiling for difficult fields to $9.89 per MMBtu
The Indian government has increased the ceiling price for natural gas extracted 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 six months starting October 1, up from $8.90. This new price applies to gas produced from deepwater, ultra-deepwater, and high-pressure, high-temperature discoveries, and is set to remain in effect until March 31, 2027.
The higher ceiling aims to provide relief to producers developing India’s technically challenging offshore gas resources, where production costs are generally higher than those from mature onshore and legacy fields. The government also kept the ceiling for gas produced from the legacy fields of state-run ONGC and Oil India Ltd at $7 per MMBtu.
For gas produced by ONGC and OIL from their nomination fields, the government has set an APM price of $11.22 per MMBtu for October, but the actual price remains capped at $7 per MMBtu. The APM gas price applies to gas produced from legacy fields and is used by priority sectors including city gas distribution, fertilizer, and power.
The government allows a 10% premium over the prevailing APM gas price for gas produced from new wells of ONGC and OIL in their nomination blocks, subject to the applicable ceiling. With the APM price for October capped at $7 per MMBtu, the effective price for new-well gas would be up to $7.70 per MMBtu. This higher price is intended to incentivize ONGC and OIL to invest in developing additional reserves and bringing new production on stream.