In a strategic policy shift to bolster the feasibility of gas production projects, the ministry of petroleum and natural gas has announced a revised pricing structure for natural gas extracted from new wells and well interventions in the designated fields of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL).
According to the new guidelines, gas from these sources will now receive a 20 percent premium over the standard Administrative Price Mechanism (APM) rate, up from the previous 10 percent premium.
The change is part of the broader domestic gas pricing policy, where the APM price is set at 10 percent of the Indian crude basket price, with monthly adjustments determined by the Petroleum Planning and Analysis Cell (PPAC).
With the recent notification, gas from new wells or well interventions in these nominated fields will be priced at 12 percent of the Indian crude basket price, effectively reflecting the 20 percent premium.
The policy adjustment is expected to enhance the economic viability of new gas development projects, especially in challenging areas where production costs are higher due to the need for advanced technology and significant capital investment.
The ministry of petroleum and natural gas has highlighted that this pricing enhancement is essential for ONGC and OIL to increase production in fields that require more resources and technology to fully exploit.
The Directorate General of Hydrocarbons (DGH) has been tasked with establishing the operational details of the premium pricing, which has now received approval from the ministry. The revised pricing is anticipated to be a key driver in developing new gas resources across the country.
ONGC has already greenlit several major projects aimed at boosting domestic gas production. Among the most notable is the Daman upside development project in the Mumbai high field, approved at a cost of ₹7,800 crore.
The project is expected to yield peak production of approximately five million metric standard cubic meters per day (MMSCMD) of natural gas. Additionally, the ONGC Board has approved the Integrated Development of four contract areas under the Discovered Small Fields (DSF-II) policy.
This project, with an estimated cost of ₹6,000 crore, is expected to achieve a peak production of around four MMSCMD of gas. The central government has already granted pricing and marketing freedom for this project under the DSF Policy, further supporting its economic feasibility. As with the Daman project, the contract for this project has also been awarded, paving the way for increased production in the near future.
As reported by msn.com, the notification of a 20 percent premium on gas prices for new wells in ONGC and OIL fields represents a strategic move by the Indian government to strengthen domestic gas production.
By enhancing the attractiveness and viability of gas development projects, this policy is expected to play a crucial role in meeting India’s energy demands and advancing the nation’s energy security and sustainability objectives.
