India raises gas ceiling price for deepwater fields to $9.89/MMBtu

The Indian government has increased the ceiling price for natural gas produced from technically challenging fields, including deepwater, ultra-deepwater, and high-pressure, high-temperature areas. The price ceiling has been raised to $9.89 per million British thermal units (MMBtu) from the previous $8.90 per MMBtu. This revised rate is set to apply for the six-month period from October 1, 2026, to March 31, 2027.

This adjustment is intended to provide financial relief to producers operating in complex offshore environments, such as the KG-D6 block operated by Reliance Industries and BP, where production costs are significantly higher than in mature onshore fields. While these producers have marketing and pricing freedom, they must operate within this government-notified cap.

In contrast, the government has maintained the price ceiling for gas from the legacy nomination fields of state-run companies ONGC and Oil India Ltd at $7 per MMBtu. Although the Administered Price Mechanism (APM) gas price for October was notified at $11.22 per MMBtu, the actual realization for these legacy fields remains capped at $7. To encourage investment in new production, the government allows ONGC and Oil India Ltd to receive a 10 per cent premium over the prevailing APM price for gas from new wells in their nomination blocks, subject to applicable ceilings.