The government has raised the ceiling price for natural gas produced from difficult fields, including deepwater, ultra-deepwater and high-pressure, high-temperature discoveries, to $9.89 per million British thermal units (MMBtu) for the six months starting October 1, 2026.
The new ceiling is up from $8.90 per MMBtu and will remain in effect until March 31, 2027, according to a notification issued by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas.
ALSO READ: SC To Take Suo Moto Note Of Proposed Relocation Of 135-Year-Old Central Secretariat Library
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The revised ceiling applies to technically challenging offshore resources such as Reliance Industries and BP's KG-D6 block in the Krishna-Godavari basin. Producers of gas from these fields have marketing and pricing freedom under government policy, but prices remain subject to a government-notified ceiling.
The increase might provide some relief to producers developing India's more challenging offshore gas resources, where exploration and production costs are generally higher than those associated with mature onshore and legacy fields. The separate pricing regime was introduced to encourage investment and accelerate development of difficult hydrocarbon reserves.
For October, the government has notified an administered price mechanism (APM) gas price of $11.22 per MMBtu for ONGC and OIL's nomination fields, but the actual price remains capped at $7 per MMBtu. APM gas is supplied to priority sectors including city gas distribution, fertiliser manufacturing and power generation.
For gas produced from new wells in ONGC and OIL's nomination blocks, producers are permitted a 10% premium over the prevailing APM price, subject to the applicable ceiling. With the October APM ceiling at $7 per MMBtu, the effective price for new-well gas can therefore reach $7.70 per MMBtu, as per to PPAC.
The premium is intended to encourage ONGC and OIL to invest in developing additional reserves and bringing new production on stream, while keeping prices from older legacy fields under the existing ceiling.
In April 2023, the government moved legacy-gas pricing to a formula linked to 10% of the monthly average crude oil import price, subject to a floor and ceiling. The ceiling was initially set at $6.50 per MMBtu and subsequently increased annually by $0.25 after a two-year freeze, reaching $6.75 in April 2025 and $7 this year.
ALSO READ: India Summons Pakistan Diplomat Over 'Continued' Cross-Border Infiltration
Natural gas remains a crucial feedstock for fertiliser production and is widely used for power generation and by city gas distributors supplying CNG and PNG. Changes in domestic gas prices can therefore influence costs across several key sectors of the Indian economy.
(With the PTI inputs)
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
