New Delhi, March 31 The government has increased the administered price mechanism (APM) gas price for state-run producers Oil and Natural Gas Corporation and Oil India Limited to USD 7 per mmBtu, up from USD 6.75 per mmBtu, according to an official notification.
This revision applies to gas produced from legacy fields under the regulated pricing regime. APM gas accounts for about 60 per cent of domestic gas production at 92 million standard cubic metres per day, and an increase in its rates will impact user industries, from fertilizer to CNG and piped cooking gas.
This revision follows the pricing mechanism that the government approved in 2023.
Under the revised guidelines, the price of such natural gas produced from old and legacy fields, which were given to state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) without bidding, is determined as 10 per cent of the monthly average of the Indian Crude Basket and is notified on a monthly basis.
For gas produced by ONGC and OIL from their nomination blocks, the APM price is subject to a floor of USD 4 per million British thermal unit (mmBtu) and a ceiling of USD 6.5 per mmBtu. This ceiling was to be maintained for two financial years (2023-24 and 2024-25) and then increased by USD 0.25 per mmBtu.
Following this formula, the ceiling was raised to USD 6.75 for the fiscal year, starting April 1, 2025, and is now USD 7.
The Oil Ministry's Petroleum Planning and Analysis Cell (PPAC), in an official order, said the price of domestic natural gas for April is USD 10.76 per mmBtu based on gross calorific value (GCV).
However, this price is subject to the floor and ceiling.
"For the gas produced by ONGC/OIL from their nomination fields, the above-mentioned APM price shall be subject to a ceiling of USD 7 per mmBtu on GCV basis for the same period," PPAC said.
Natural gas pumped from below the earth's surface and seabed is used to produce fertilizer, generate electricity, is converted into CNG to power automobiles, piped into household kitchens for cooking, and used in industries as feedstock.
This price revision comes amid the war in West Asia, which is straining global energy supply chains and leading to elevated prices. Crude oil prices have risen by almost 50 per cent in the last one month to over USD 100 per barrel.
The government had, through a notification dated April 7, 2023, also allowed a premium of 20 per cent over the APM prices on gas produced from new wells and well interventions of ONGC and OIL from their nomination fields.
Also, the government has provided marketing and pricing freedom for gas produced from difficult fields, such as deepwater, ultra-deepwater and high-pressure-high-temperature areas, such as the KG-D6 fields of Reliance Industries Ltd. They are allowed a higher price than APM, subject to a ceiling.
Under this framework, the ceiling price is to be notified by PPAC twice a year. For the period October 1, 2025, to March 31, 2026, the ceiling price has been notified as USD 9.72 per mmBtu.
PPAC has, however, not yet notified the ceiling price for the period from April 2026 to September 30, 2026.