India has announced significant changes to its domestic gas allocation policy to enhance the availability and affordability of natural gas.
Starting from the first quarter of fiscal 2026, allocations for compressed natural gas (CNG) and piped natural gas (PNG) will be made on a two-quarter advance basis.
The revamped policy includes new well gas (NWG) from the nomination fields of the state explorers Oil and Natural Gas Corporation (ONGC) and Oil India.
The forecasts provided by GAIL and ONGC will facilitate supply visibility for city gas distribution (CGD) entities in advance, thereby improving planning and delivery efficiency.
Additionally, the auction-based allocation for NWG will be replaced with a quarterly pro-rata allocation to ensure a timely and reliable supply of natural gas.
GAIL will distribute NWG to CGD entities in proportion to their needs, in line with the current guidelines set by the Ministry of Petroleum and Natural Gas (MoPNG).
Both administered pricing mechanisms (APM) gas and NWG prices are linked to Indian crude basket prices, calculated monthly.
The government anticipates that this allocation strategy will make natural gas more affordable for CNG and PNG consumers, especially after a recent decline in crude prices.
The distribution of natural gas sold under the government-regulated APM has declined over the years because of reduced production at domestic wells, reported Reuters.
This has impacted CGD companies such as Mahanagar Gas (MGAS), Indraprastha Gas (IGAS), and Gujarat Gas (GGAS), which have experienced squeezed margins in recent quarters.
These policy changes come as the government has reduced APM gas allocation to CGD companies by 18% to 20%, effective from 16 April.
These measures will guarantee a stable, affordable, and transparent domestic gas supply system for the essential transport and residential sectors within the CGD network, benefiting millions of urban and semi-urban consumers throughout India.
India is also considering eliminating import taxes on US ethane and liquefied petroleum gas (LPG) as part of broader trade negotiations with the US.
The proposal aligns with India’s interest in removing import taxes on US liquefied natural gas (LNG) and increasing its purchases from the US.
Additionally, India has accelerated its exploration and production (E&P) efforts by awarding 28 blocks under the Open Acreage Licensing Policy (OALP) Bid Round-IX.
This expansion spans 136,596km2 across eight sedimentary basins, with 38% located in areas that were previously off-limits.
