India cuts domestic gas prices for January

India has reduced the regulated wholesale prices of locally produced natural gas to $7.82/mn Btu for January, down from $8.47/mn Btu in December, the Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC) said on December 31.

The prices are now set as per a new formula announced earlier in the year. As per the new formula, the price of the gas produced domestically will be 10% of the monthly average of the Indian crude basket and notified on a monthly basis. Earlier the prices were adjusted every six months. The gas price will, however, have a floor of $4/mn Btu and a cap of $6.5/mn Btu.

The older formula was based on the prices of four major global gas trading hubs - Henry Hub, Albany, National Balancing Point (UK), and Russian gas.

The government's decision is based on the recommendations of an expert panel chaired by economist Kirit Parikh, which submitted its report in November last year.