Politics · India Bureau
India raises deepwater gas price ceiling to $9.89 per MMBtu
The government has lifted the price cap for difficult-field gas production, including output from the KG-D6 block, effective from October 2026. The administered price mechanism for conventional fields remains unchanged at $7 per MMBtu.
LSN India ·
India's government has increased the price ceiling for deepwater and difficult-field natural gas to $9.89 per million British thermal units (MMBtu), a move aimed at encouraging exploration and production in challenging offshore reserves. The new pricing framework will apply to the October 2026 to March 2027 period and covers difficult-field gas including production from the KG-D6 block operated by major producers.
The decision maintains the administered price mechanism (APM) for legacy fields operated by Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) at the existing cap of $7 per MMBtu. This tiered pricing approach reflects the government's strategy to balance investment incentives for high-cost production with stable pricing for conventional reserves.
The KG-D6 block, one of India's most significant offshore gas fields located in the Krishna-Godavari Basin, has been central to discussions around gas pricing policy. The higher ceiling for difficult-field gas is intended to support the viability of marginal and deepwater projects that require substantial capital investment and face higher extraction costs.
The pricing framework comes as India seeks to boost domestic gas production and reduce import dependency. Natural gas plays an important role in India's energy mix, serving power generation, fertilizer production, and industrial sectors, making domestic supply security a key policy priority for the government.