Mumbai, Oct. 9 -- The Ministry of Petroleum and Natural Gas has raised the maximum price at which natural gas from deep-water, ultra-deep-water and high-pressure-high-temperature (HP-HT) fields can be sold to USD 9.89 per million British thermal units (MMBtu), from the earlier ceiling of USD 8.90 per MMBtu. The revised ceiling will apply from October 1, 2026, to March 31, 2027.
In rupee terms, the ceiling has increased from around Rs. 930 to approximately Rs. 1,030 per MMBtu. The pricing framework covers gas produced from offshore fields where extraction costs are substantially higher than those associated with conventional fields. Production blocks such as KG-D6 in the Krishna-Godavari basin fall under the mechanism.
The higher ceiling is expected to provide greater pricing flexibility and improve the economics for companies producing gas from technically challenging offshore areas. The change allows producers to charge a higher maximum price for eligible output, although the actual price paid by downstream consumers will depend on supply agreements and market conditions.
Natural gas is used across several important sectors. It is supplied as compressed natural gas (CNG) for vehicles and piped natural gas (PNG) for households through city gas distribution networks. It is also a major feedstock for fertiliser production and is used as a fuel for power generation.
The revised ceiling could therefore affect the cost structures of these industries. However, the increase does not automatically result in an immediate or proportionate rise in retail prices for consumers. The eventual impact on CNG and PNG prices will depend on the rates at which gas is actually supplied and on whether city gas distributors and other downstream users absorb or pass on higher input costs. Fertiliser and power producers may similarly assess the effect based on their procurement arrangements and operating costs.
Published by HT Digital Content Services with permission from Construction World.