Kirit Parikh panel submits gas report, suggests pricing freedom beginning Jan 2026
The Hindu
The panel has suggested linking the price of gas produced by state-owned firms from fields given to them on a nomination basis to imported crude oil prices.
A government-appointed gas price review panel, led by Kirit Parikh on Wednesday submitted its report to the government, recommending a floor and ceiling price for legacy fields and complete pricing freedom starting January 1, 2026.
A fixed band of pricing for gas from legacy fields, which makes up for two-thirds of all natural gas produced in the country, would ensure a predictable pricing regime for producers and at the same time moderate prices of CNG and piped cooking gas which has shot up by 70% since last year on the back of a surge in input cost.
The panel has suggested linking the price of gas produced by state-owned firms from fields given to them on a nomination basis to imported crude oil prices rather than benchmarking them to gas rates in international markets, Parikh said, adding the rates thus arrived would be subject to a floor and ceiling.
State producers Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) will be paid a price linked to imported oil but it will have a minimum or floor price of $4 per million British thermal unit and a cap or ceiling price of $6.5.
This compares to the current rate of $8.57 derived from a formula linked to the price prevailing in gas-surplus nations.
The ceiling rate for this gas from legacy or old fields, called APM gas, will be increased by $0.5 per mmBtu annually, he said. "From January 1, 2027, we have suggested market-determined pricing of APM gas." The panel was in favour of not tinkering with the existing pricing formula for fields in difficult geology such as KG-D6 of Reliance Industries and bp plc.
Currently, fields in deepsea or in high-temperature, high-pressure zones are governed by a different formula that includes an element of imported LNG cost but the same is also subject to a ceiling. The ceiling for these fields currently is $12.46.
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