Government Approves 20% Gas Price Premium for ONGC and OIL to Boost Production

The Ministry of Petroleum and Natural Gas has approved a 20% premium over APM prices for gas produced from new wells or interventions by ONGC and OIL. This move aims to make new gas projects viable, enhance production, and align with India's 2030 energy vision.

The Ministry of Petroleum and Natural Gas has announced a 20% premium over the Administrative Price Mechanism (APM) for gas extracted from new wells or interventions in nomination fields of ONGC and Oil India Limited (OIL). The APM price is typically set at 10% of the Indian Crude basket price by the Petroleum Planning and Analysis Cell (PPAC) each month.

Under the new guidelines, gas from new wells or interventions in nominated fields will see a price increase to 12% of the Indian Crude basket price. This policy, now approved by the Directorate General of Hydrocarbon (DGH), seeks to enhance the viability of new gas projects and increase production in challenging areas that demand higher capital and advanced technology.

Recently, the ONGC Board approved the Daman Upside Development Project in Mumbai High, with a project cost of Rs 7,800 crore aimed at increasing domestic gas production to about 5 MMSCMD. Another project, Integrated Development of 4 Contract areas under DSF-II, was also sanctioned with a projected output of 4 MMSCMD of gas and a cost of Rs 6,000 crore. Both projects have already been awarded for execution.

This strategic policy decision supports India's goal of raising the natural gas share in the energy basket from the current 6% to 15% by 2030, aligning with the national energy vision.

(With inputs from agencies.)