India Raises Deepwater Gas Price Ceiling
The revised ceiling rises to $9.89 per MMBtu for difficult-field gas through March 2027, while legacy gas remains capped at $7.
The Indian government has raised the ceiling price for natural gas produced from deepwater, ultra-deepwater and high-pressure, high-temperature fields to $9.89 per million British thermal units (MMBtu), up from $8.90 previously. The revised ceiling applies from October 1, 2026, to March 31, 2027, according to a notification issued by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas.
The revised limit covers technically challenging offshore resources, including Reliance Industries and BP’s KG-D6 block in the Krishna-Godavari basin. Although producers in these fields have marketing and pricing freedom under government policy, the prices they charge remain subject to the notified ceiling.
The higher ceiling may provide some relief to companies developing difficult offshore reserves, where exploration and production costs are generally higher than those associated with mature onshore and legacy fields. The pricing framework is intended to encourage investment and support the development of technically challenging domestic hydrocarbon resources.
Separately, the government has notified an administered price mechanism (APM) gas price of $11.22 per MMBtu for October for gas from the nomination fields of state-run Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL). However, the actual price for gas from these legacy fields remains capped at $7 per MMBtu.
Gas produced from new wells in ONGC and OIL’s nomination blocks can qualify for a 10% premium over the prevailing APM price, subject to the applicable ceiling. With the October cap at $7 per MMBtu, the effective price for eligible new-well gas can reach $7.70 per MMBtu.
Natural gas is an important input for fertiliser manufacturing, power generation and city gas distribution, which supplies compressed natural gas (CNG) and piped natural gas (PNG). Changes in domestic gas pricing can affect costs across these sectors, although the impact depends on the applicable pricing arrangements and how costs are passed through.