ONGC's APM gas outprices deepwater gas on paper

Economy No. 54 9 October 2026 · 2 min read

India prices the gas from its own fields in 2 ways: one for APM gas and one for deepwater gas. Since April 2026 the 2 have often given a strange result: in 5 of the 7 months from April to October, the APM formula came out above the most that deepwater gas may sell for. And October 2026 is the latest.

APM gas (administered price mechanism) comes from ONGC's and Oil India's "nomination" fields, old fields the government handed them decades ago without bidding. The government prices it at 10% of the average price of the crude India imports, which resets every month. For October 2026 that formula gave $11.22 per MMBtu (the unit gas is sold in).

Deepwater gas, in the government's rules, is gas from deepwater, ultra-deepwater and high-pressure, high-temperature (HPHT) fields: deep under the sea, or in rock so hot and pressurised that drilling is difficult. The government itself calls these "difficult areas". Since 2016, gas from newer fields of this kind can be sold at market prices, up to a limit. On 30 September 2026 that limit was set at $9.89 for October 2026 to March 2027.

So in October the APM formula is again above the most that deepwater gas can sell for. The APM formula moves every month with crude: it jumped from $6.81 in March 2026 to $10.76 in April. The deepwater limit changes only every 6 months, using fuel prices from the past year, a quarter late. In April it actually fell, from $9.72 to $8.90.

And ONGC and Oil India do not even get the $11.22. Their price for APM gas is capped at $7.00, which has risen by only $0.25 a year since 2025. So they get $4.22 less per MMBtu than the formula, 38% of it.

The government said these rules would make piped gas and CNG cheaper and lower its fertiliser subsidy bill. But the cost falls on ONGC and Oil India, which it also wants to produce more gas. ONGC sits on both sides. Its APM gas is stuck at $7.00, while its deepwater gas, such as from its KG-DWN-98/2 block, can sell for up to $9.89.

Step chart of India's gas prices in US$ per MMBtu, October 2025 to October 2026: the monthly APM gas formula, the 6-monthly deepwater limit and what ONGC is paid. In October 2026 the formula is $11.22, the deepwater limit $9.89 and ONGC is paid $7.00.

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