The Indian government has approved revised domestic gas pricing guidelines for gas produced from legacy or old fields (known as APM gas, i.e., produced by ONGC or OIL before 1999, New Exploration Licensing Policy (NELP) blocks and pre-NELP blocks), where Production Sharing Contract (PSC) provides for Government's approval of prices. This APM gas will be priced at 10% of the monthly average of Indian Crude Basket (imported oil), instead of benchmarking it to gas prices in four surplus countries such as the United States, Russia or Canada, and will have to range between US$4/MMBtu and US$6.5/MMBtu. For new wells in APM fields operated by ONGC and OIL, a 20% premium over the APM price will be allowed.
This US$6.5/MMBtu cap is lower than the current rate of US$8.57/MMBtu and should contribute to reduce prices of piped cooking gas for households and CNG for transport, which surged by 80% between August 2021 and August 2022.The price of piped cooking gas should decline by 10% and the reduced prices should also lower the fertilizer subsidy burden and help the domestic power sector.