India has increased the ceiling price for natural gas from difficult fields, including Reliance Industries and BP's KG-D6 block, to $9.89 per million British thermal units (MMBtu) for the six-month period starting October 1. This is up from the previous ceiling of $8.90 per MMBtu, according to a notification from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.
The new ceiling applies to gas produced from deepwater, ultra-deepwater, and high-pressure, high-temperature fields, which are considered technically challenging and have higher production costs. While gas from these difficult areas enjoys marketing and pricing freedom, it remains subject to the government-notified ceiling. The updated price ceiling will be effective from October 1, 2026, to March 31, 2027, the PPAC notification stated.
This adjustment provides relief to producers working on offshore gas resources, where extraction is more complex compared to mature onshore and legacy fields. For comparison, gas from legacy fields operated by state-run ONGC and Oil India Ltd remains capped at $7 per MMBtu, despite an administered price mechanism (APM) price of $11.22 per MMBtu for October. The APM gas price supports priority sectors such as city gas distribution, fertilizer, and power.
The government’s decision to raise the ceiling price for difficult fields like KG-D6 reflects efforts to balance producer incentives with market regulation. The ceiling will remain in place through March 31, 2027, impacting production economics for major offshore projects including Reliance-BP’s KG-D6 block, per livemint.com.