Gas Price Update: The government has increased the maximum price for natural gas extracted from challenging regions, such as Reliance Industries and BP’s KG-D6 block, to $9.89 per mmBtu. This adjustment will be effective from October 1, 2026, until March 31, 2027, whereas the previous cap was $8.90 per unit. The modification applies to gas derived from deepwater, ultra-deepwater, and high-pressure and high-temperature zones.
On the other hand, the pricing of gas obtained from older fields managed by public sector entities like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. will stay at $7 per unit. As per government guidelines, companies extracting gas from such challenging fields have the liberty to decide on marketing and pricing strategies, but there is a maximum price threshold set by the government. The rise in the price ceiling is anticipated to ease the financial burden on these companies since gas extraction from such fields is more costly compared to regular and aging fields.
The Petroleum Planning and Analysis Cell (PPAC) of the Petroleum Ministry has issued a notification stating that this new price cap for gas will be applicable from October 1, 2026, until March 31, 2027.
The APM (Administered Price Mechanism) price for gas from specified fields of ONGC and OIL will be $11.22 per unit in October, yet the actual price will be capped at $7 per unit. The APM price pertains to gas extracted from old fields of ONGC and OIL, primarily for sectors like city gas distribution, fertilizers, and power generation.
The government has permitted a 10 percent premium over the current APM price for gas produced from new wells in designated fields of ONGC and OIL, subject to applicable restrictions. With the APM price set at $7 per unit for October, the gas price from new wells will be $7.70 per mmBtu. The government altered the pricing system for old gas fields in April 2023, connecting the gas price to 10 percent of the imported crude oil price, with defined minimum and maximum price limits.
The maximum APM gas price was raised to $6.75 per mmBtu in April 2025 and further to $7 per mmBtu in April 2026. Natural gas serves as a crucial raw material in fertilizer manufacturing, power generation, as well as in the provision of CNG and piped natural gas (PNG) to households by city gas distribution firms. Consequently, fluctuations in domestic gas prices can impact expenses in these sectors.
In essence, this government decision will enable companies operating in challenging and costly gas fields to charge higher prices, while the price cap for gas from aged fields of ONGC and Oil India will persist at $7 per mmBtu for the time being.