+
Government Partially Restores Gas Supply to IGL and Adani-Total
OIL & GAS

Government Partially Restores Gas Supply to IGL and Adani-Total

The government has increased the supply of cheaper gas to city gas retailers such as IGL, Adani-Total, and Mahanagar Gas, restoring a significant portion of the allocation that was reduced in 2024, according to regulatory filings from the companies. In October and November of the previous year, the government had reduced supplies of APM Gas (low-priced natural gas from older fields like Mumbai High and Bassein in the Bay of Bengal) by up to 40 per cent due to limited output. This led to city gas retailers raising CNG prices by Rs 2-3 per kg and planning further hikes as they replaced lost volumes with more expensive fuel.

The price increase made CNG less competitive compared to alternative fuels like diesel. In response, the Ministry of Petroleum and Natural Gas issued a directive on December 31, 2024, to reorganize some gas allocations produced from below ground and undersea. The ministry ordered a reduction in gas supplied to state-owned GAIL and Oil and Natural Gas Corporation (ONGC) for LPG production, reallocating those volumes to city gas entities. Of the total 2.55 million standard cubic meters per day of gas used for LPG production, 1.27 mmscmd (0.637 mmscmd each for GAIL and ONGC) was directed to be diverted to the CNG and piped cooking gas segment for the January-March quarter.

In their regulatory filings, city gas retailers stated that the increased volumes of APM gas would begin on January 16. Indraprastha Gas (IGL) informed that, according to a communication from GAIL (India), the allocation of domestic gas for IGL would increase by 31 per cent starting January 16, 2025, which would raise the share of domestic gas in the CNG segment from 37 per cent to 51 per cent. IGL also secured additional volumes of imported LNG at competitive prices from one of its major suppliers (around 1 million standard cubic meters per day). The company stated that these changes would positively impact its profitability.

Adani-Total Gas, which supplies CNG in cities across Gujarat and other areas, confirmed that its allocation of APM gas had been increased by 20 per cent effective January 16, 2025. The company added that this revision would help stabilize retail prices for end-consumers. Similarly, Mahanagar Gas, which retails CNG in Mumbai and other cities, reported a 26% increase in its APM gas allocation, raising its share of CNG gas from 37 per cent to 51 per cent.

GAIL and ONGC will now need to use higher-priced gas from newer fields or rely on imported liquefied natural gas (LNG) to make up for the volumes diverted to city gas retailers. The LPG produced by GAIL and ONGC is sold to fuel retailers like Indian Oil Corporation (IOC) for distribution as domestic cooking gas in cylinders, which is subsidized by the government. As a result, the government is likely to bear the higher production costs.

The government had previously reduced supplies of domestically produced gas to city gas retailers by 5-5.25 mmscmd. Half of this reduction is being restored immediately, with more expected once gas from the Ramnad field and new wells begins flowing.

Natural gas extracted from beneath the ground and from offshore fields in India is used to produce CNG for vehicles and piped cooking gas for households. However, production from legacy fields, known as APM gas, has been declining by up to 5 per cent annually due to natural depletion. This decline has resulted in reduced supplies to city gas retailers.

Although the gas for piped cooking gas remains protected, the supply of gas for CNG has been cut. In May 2023, APM gas met 90 per cent of the CNG demand, but this proportion had fallen to 50.75 per cent by October 16, 2024, and further decreased starting November 16, 2024. While APM gas is priced at $6.5 per million British thermal units, gas from newer fields costs about $2 more.

The government has increased the supply of cheaper gas to city gas retailers such as IGL, Adani-Total, and Mahanagar Gas, restoring a significant portion of the allocation that was reduced in 2024, according to regulatory filings from the companies. In October and November of the previous year, the government had reduced supplies of APM Gas (low-priced natural gas from older fields like Mumbai High and Bassein in the Bay of Bengal) by up to 40 per cent due to limited output. This led to city gas retailers raising CNG prices by Rs 2-3 per kg and planning further hikes as they replaced lost volumes with more expensive fuel. The price increase made CNG less competitive compared to alternative fuels like diesel. In response, the Ministry of Petroleum and Natural Gas issued a directive on December 31, 2024, to reorganize some gas allocations produced from below ground and undersea. The ministry ordered a reduction in gas supplied to state-owned GAIL and Oil and Natural Gas Corporation (ONGC) for LPG production, reallocating those volumes to city gas entities. Of the total 2.55 million standard cubic meters per day of gas used for LPG production, 1.27 mmscmd (0.637 mmscmd each for GAIL and ONGC) was directed to be diverted to the CNG and piped cooking gas segment for the January-March quarter. In their regulatory filings, city gas retailers stated that the increased volumes of APM gas would begin on January 16. Indraprastha Gas (IGL) informed that, according to a communication from GAIL (India), the allocation of domestic gas for IGL would increase by 31 per cent starting January 16, 2025, which would raise the share of domestic gas in the CNG segment from 37 per cent to 51 per cent. IGL also secured additional volumes of imported LNG at competitive prices from one of its major suppliers (around 1 million standard cubic meters per day). The company stated that these changes would positively impact its profitability. Adani-Total Gas, which supplies CNG in cities across Gujarat and other areas, confirmed that its allocation of APM gas had been increased by 20 per cent effective January 16, 2025. The company added that this revision would help stabilize retail prices for end-consumers. Similarly, Mahanagar Gas, which retails CNG in Mumbai and other cities, reported a 26% increase in its APM gas allocation, raising its share of CNG gas from 37 per cent to 51 per cent. GAIL and ONGC will now need to use higher-priced gas from newer fields or rely on imported liquefied natural gas (LNG) to make up for the volumes diverted to city gas retailers. The LPG produced by GAIL and ONGC is sold to fuel retailers like Indian Oil Corporation (IOC) for distribution as domestic cooking gas in cylinders, which is subsidized by the government. As a result, the government is likely to bear the higher production costs. The government had previously reduced supplies of domestically produced gas to city gas retailers by 5-5.25 mmscmd. Half of this reduction is being restored immediately, with more expected once gas from the Ramnad field and new wells begins flowing. Natural gas extracted from beneath the ground and from offshore fields in India is used to produce CNG for vehicles and piped cooking gas for households. However, production from legacy fields, known as APM gas, has been declining by up to 5 per cent annually due to natural depletion. This decline has resulted in reduced supplies to city gas retailers. Although the gas for piped cooking gas remains protected, the supply of gas for CNG has been cut. In May 2023, APM gas met 90 per cent of the CNG demand, but this proportion had fallen to 50.75 per cent by October 16, 2024, and further decreased starting November 16, 2024. While APM gas is priced at $6.5 per million British thermal units, gas from newer fields costs about $2 more.

Next Story
Infrastructure Urban

Autodesk Appoints Kamolika Gupta Peres as VP, India & SAARC

Autodesk announced the appointment of Kamolika Gupta Peres as vice president, Autodesk India and SAARC business, effective June 2025. In her new role, she will lead Autodesk’s growth and scaling efforts in India and SAARC, strengthen the company’s customer and partner ecosystem, and further deepen Autodesk’s position as a trusted transformation partner in the region.Known for her agile, empathetic leadership and passion for bold, future-focused transformation, Kamolika brings a people-first approach that inspires clarity, ownership, and high performance across teams. As the leader of Ind..

Next Story
Real Estate

Major Developers Expands into RAK Central

Major Developers announced the acquisition of a prime land parcel in RAK Central, Ras Al Khaimah’s new commercial and administrative hub.  The move marks a significant milestone in the company’s expansion strategy and underscores its commitment to supporting the emirate’s infrastructure-driven ambitions under RAK Vision 2030, Ras Al Khaimah's strategic framework to achieve sustainable, diversified, and globally competitive growth. “With RAK Central, we’ve created a mega-development that is structurally aligned with regional growth, global investment patterns, and natio..

Next Story
Real Estate

Garg Realty to Invest Rs 4 Bn in Dholera for Land Aggregation Projects

Garg Realty Group, a leading real estate builder and developer based in Gurgaon, has announced an investment of over Rs 4 billion for projects in Dholera, Gujarat, over the next 3 years. The company has already invested in 20–22 acres of land in the region and, with this new capital, plans to acquire additional land to cater to Dholera’s rising demand for industrial, commercial, and residential infrastructure. The investment is backed by a mix of internal accruals and financial partnerships, reflecting the long-term commitment to the development of India’s first greenfield smart city.&nb..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?