The Indian government has approved a new method to fix the price of natural gas. The price of natural gas produced from old fields, called APM gas, will now be linked to the price of crude oil instead of gas prices in surplus nations such as the US, Canada, and Russia.
The government hopes that this change will make piped natural gas cheaper by 10% and lower the cost of compressed natural gas by 6% to 9%. The new pricing method will come into force on Saturday and will be notified on a monthly basis based on the monthly average of Indian Crude Basket.
The government aims to increase the share of natural gas in the primary energy mix from 6.5% to 15% by 2030. The government believes that this change will help expand the consumption of natural gas, reduce emissions and contribute to achieving the target of net-zero emissions.
The revised guidelines are expected to protect the interests of consumers by reducing the impact of international gas prices on domestic prices. The previous pricing method based on four gas hubs had significant time lag and high volatility. This is being seen as an innovative way to fix prices and provide relief for consumers in an election year.
