India raises ceiling for difficult-field gas to $9.89 per MMBtu

India has raised the ceiling price for natural gas produced from difficult fields to $9.89 per million British thermal units (MMBtu) for the six months beginning October 1, 2026, according to a notification cited by The Hindu. The new ceiling, announced by the Petroleum Planning and Analysis Cell of the oil ministry, applies to gas from deepwater, ultra-deepwater and high-pressure, high-temperature discoveries. It replaces the previous ceiling of $8.90 per MMBtu and remains in force until March 31, 2027.

The government allows producers in these fields marketing and pricing freedom, but subjects their sales to a notified ceiling. The higher limit could support companies developing technically challenging offshore resources, where production costs are generally higher than those of mature onshore and legacy fields. Gas from the KG-D6 block, operated by Reliance Industries and BP in the Krishna-Godavari basin, falls within the difficult-field category.

The government has kept the ceiling for gas produced from the legacy nomination fields of state-owned Oil and Natural Gas Corporation and Oil India at $7 per MMBtu. Although the administered price mechanism price for October is $11.22, the actual price for this gas remains capped at $7. Gas from the two companies’ new wells in nomination blocks can receive a premium of up to 10 per cent over the applicable administered price.

With the ceiling at $7, the effective price for new-well gas can therefore reach $7.70 per MMBtu. The separate treatment is intended to encourage ONGC and Oil India to develop additional reserves while retaining a lower ceiling for older fields. Natural gas is used by fertiliser producers, power generators and city gas distributors supplying compressed and piped natural gas.

Changes in domestic prices can therefore influence costs in those sectors, although the supplied material gives no estimate of the effect of the latest adjustment.