Government Increases Deepwater Natural Gas Price Ceiling to $9.89

The Indian government has raised the ceiling price for natural gas produced from difficult fields to $9.89 per million British thermal units for the six months starting October 1, 2026. This new rate applies to deepwater, ultra-deepwater, and high-pressure discoveries, including the KG-D6 block operated by Reliance Industries and BP, moving up from the previous ceiling of $8.90.

Legacy Fields

At the same time, the government kept the ceiling price for gas produced from the legacy fields of state-run Oil and Natural Gas Corporation and Oil India Limited at $7 per MMBtu. The Petroleum Planning and Analysis Cell of the oil ministry noted that the Administered Price Mechanism price for October is $11.22 per MMBtu, but the actual price for these older fields remains capped at the $7 limit.

Context

Natural gas serves as a vital raw material for producing fertilizers, generating electricity, and supplying city gas networks with compressed and piped gas. Different pricing systems help balance the high costs of exploring challenging offshore reserves with the need to keep fuel affordable for key public sectors.