India has increased the ceiling price for natural gas from challenging deepwater fields by 11% to incentivize exploration and production. This strategic move aims to boost domestic output, even as prices for older, easier-to-access gas remain capped lower.
$9.89/MMBtu
New Deepwater Gas Ceiling
Previous Ceiling: $8.90/MMBtu→$9.89/MMBtu
⏳ Time Machine
How today’s news fits into the bigger picture
April 2023
New Gas Pricing Formula Introduced
The government shifted legacy gas pricing to a formula linked to 10% of crude oil import prices, with an initial ceiling of $6.50/MMBtu, aiming for more stable and market-linked rates for older fields.
April 2025
Legacy Gas Ceiling Increased
Following a two-year freeze, the APM ceiling for legacy gas was incrementally raised by $0.25, reaching $6.75/MMBtu, signaling a gradual adjustment in administered prices.
August 2026
ONGC Eyes Deepwater Potential
ONGC stated deepwater wells were becoming viable at projected oil prices above $75/barrel, indicating renewed interest in these high-cost fields, with an investment of ₹84,084 crore allocated for Samudra Manthan program.
September 2026
Previous Deepwater Price Set
The ceiling price for deepwater gas was set at $8.90/MMBtu for the six months ending September 2026, providing the benchmark for today's increase.
October 3, 2026
Petroleum Ministry Notification Issued
The Petroleum Planning and Analysis Cell (PPAC) issued the notification for the new deepwater gas price ceiling, making the revision official.
Today
India's government increased the ceiling price for natural gas from deepwater fields to $9.89/MMBtu for the next six months.
What happens next?
Energy companies will likely accelerate investment in deepwater exploration and production over the next six months, with the next price review due by April 2027.
The Indian government has raised the ceiling price for natural gas extracted from difficult fields, such as deepwater and high-pressure, high-temperature (HPHT) areas. The new ceiling, effective from October 1, 2026, to March 31, 2027, is **$9.89 per million British thermal units (MMBtu)**, up from $8.90 per MMBtu. This hike is designed to encourage energy companies like Reliance Industries and BP, which operate in such technically demanding offshore resources, to invest more in exploration and production. Meanwhile, the administered price mechanism (APM) gas price for October for legacy fields operated by state-run ONGC and Oil India (OIL) remains capped at **$7 per MMBtu**, despite a higher notified price of $11.22 per MMBtu. Gas from new wells in these legacy blocks will receive a 10% premium, allowing it to reach up to $7.70 per MMBtu to spur new drilling.
💭 If you're wondering…
Deepwater gas refers to natural gas extracted from reservoirs located beneath significant depths of water, often requiring advanced and costly drilling technologies due to the challenging offshore conditions.
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