India Raises Gas Price Ceiling for Difficult Fields to $9.89 per MMBtu
The Indian government has raised the ceiling price for natural gas produced from difficult fields, such as the KG-D6 block operated by Reliance Industries and BP, to $9.89 per MMBtu for the period October 1, 2026, to March 31, 2027. This marks an increase from the previous ceiling of $8.90 per MMBtu. The adjustment applies to gas extracted from deepwater, ultra-deepwater, and high-pressure, high-temperature discoveries, which enjoy marketing and pricing freedom under government policy but remain subject to a notified ceiling.
The higher ceiling is expected 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. Meanwhile, the ceiling for gas produced from legacy fields of state-run ONGC and Oil India Ltd remains 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 is capped at $7 per MMBtu. The APM gas price, used by priority sectors like city gas distribution, fertilizers, and power, is derived from a formula linked to 10% of the monthly average crude oil import price. The government allows a 10% premium for gas from new wells of ONGC and OIL, bringing the effective price to up to $7.70 per MMBtu.
The higher price for new-well gas aims to incentivize ONGC and OIL to invest in developing additional reserves and boosting production, while maintaining the existing ceiling for gas from older legacy fields. India follows separate pricing mechanisms for gas from legacy fields and newer discoveries in difficult areas. The separate regime for deepwater and other challenging fields was introduced to encourage investment in India's technically demanding hydrocarbon resources by offering producers greater pricing and marketing flexibility.