India slashes domestic natural gas prices for December 2024

India has announced a reduction in the price of domestic natural gas for December 2024. The price will be set at $7.29 per million metric British thermal units (mmBtu), down from $7.53 in the previous month. However, the price floor remains at $6.5 per mmBtu, meaning that the effective price for December will not fall below this threshold. This pricing structure is based on a gross calorific value (GCV) of natural gas and will apply from December 1, 2024, to December 31, 2024.

The new pricing mechanism links domestic gas prices to the cost of imported crude oil, specifically 10 percent of the Indian crude oil basket price. Prices will be revised on a monthly basis, following guidelines set by the Ministry of Petroleum and Natural Gas (MoPNG) in April 2023. Under this framework, the domestic gas price is subject to a floor of $4 per mmBtu and a ceiling of $6.5 per mmBtu.

This reduction in the price of natural gas aligns with India’s ongoing efforts to streamline its energy policies and maintain a balance between the needs of producers and consumers. It reflects a broader strategy to manage the country's natural gas sector in a way that supports domestic production while keeping prices fair and competitive.

Natural gas produced from legacy and oil fields operated by Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) will be priced under this new regime. The revision of prices is intended to stabilise the market and contribute to the country's overall energy security.

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Key stakeholders, including the Directorate General of Hydrocarbons, ONGC, OIL, and GAIL, have been informed of the new pricing framework, ensuring that all parties are aligned in managing India’s natural gas sector effectively. By continuously monitoring global energy markets and adjusting domestic pricing accordingly, the government aims to stabilise prices and foster growth within the sector, benefiting all stakeholders involved.