The Ministry of Petroleum and Natural Gas has announced a price increase for domestic natural gas in October, marking the second consecutive monthly hike. The price has now been adjusted to $9.20 per Metric Million British Thermal Unit (mmBtu), up from $8.60/mmBtu in September.

This adjustment follows a new pricing formula that links the domestic natural gas price to the current price of the Indian crude basket. Previously, the pricing relied on the rates of four major global gas trading hubs: Henry Hub, Albany, National Balancing Point (UK), and Russian gas.

Under this new formula, the domestic natural gas price undergoes monthly recalibration, providing more frequent adjustments compared to the previous system, which revised prices every six months.

The shift to this pricing mechanism aligns with recommendations from a government-formed committee in October 2022. The change aims to bring natural gas prices in line with current market dynamics, fostering fairness and competitiveness.

However, the rise in domestic natural gas prices may have downstream effects, as gas distribution companies may pass on the increased costs. This could potentially lead to higher prices for Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) for end-users.

This pricing adjustment underscores the government’s ongoing efforts to refine the energy pricing structure and adapt it to evolving global energy market dynamics.

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