Government approves 20 percent premium for ONGC on gas from new wells

12 Aug 2024

The company said today that the government has approved a 20 percent premium over the regulated or APM price for any natural gas produced from new wells. Currently, the two pricing regimes govern most domestic production of natural gas, which is used to generate electricity, make fertilisers, convert it into CNG to run automobiles, and pipe it to homes for cooking.

This price, subject to a cap price of US$ 6.5 per million British thermal units, is called the regulated or APM price. Therefore, at the current Indian basket price of US$ 77 per barrel, the APM price for gas produced from ONGC's Mumbai High and Basin fields in the western offshore area should be US$ 7.7 per mmBtu, but it is paid a cap price of US$ 6.5.

Gas produced from difficult fields, such as the deep sea, is governed by a different formula and is paid a higher rate due to the higher costs involved in its production. The price is USD 9.87 per mmBtu for the six months starting April 1.

When these formulas were adopted last year, it was decided that gas produced from new wells, even from old fields, would be paid a 20 percent premium over the APM price, and now this has been notified.