Government Hikes APM Gas Price Amid Global Energy Crisis

The government has decided to raise the administered price mechanism (APM) gas price for state-run producers, Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), to USD 7 from USD 6.75 per mmBtu, as mentioned in an official notification. This revision affects gas from legacy fields under controlled pricing.

APM gas constitutes roughly 60% of domestic production, impacting industries including fertilizer production and CNG supply. The increase aligns with the government's 2023 pricing strategy. Prices for natural gas from established ONGC and OIL fields are now 10% of the Indian Crude Basket monthly average, bounded by a price floor of USD 4 and a ceiling of USD 6.5 per mmBtu.

The rise to USD 7 considers the impacts of geopolitical strains on global energy resources and the resulting 50% surge in crude oil prices. Additionally, the government allows a 20% premium for gas from new wells and interventions by state producers, alongside pricing freedom for challenging extraction fields like Reliance Industries' KG-D6 fields.