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The domestic price is revised every month after the last month’s Cabinet decision linked the gas price for a month to the India crude oil basket price of the previous month. The revised rate, calculated as 10% of the crude price, is $8.27 per mmbtu for the month of May. But since a cap of $6.5 per mmbtu applies to the domestic gas, the effective price would remain as it was in April.
The domestic gas price also has a floor of $4 per mmbtu. The current floor and ceiling will be valid for two years after which the price cap will start rising by 25 cents every year. This new formula applies only to gas produced by the fields operated by Oil and Natural Gas Corp and Oil India.
Under the new mechanism, the producers will also get a 20% premium over the monthly applicable price for the additional volume of gas they produce from their fields.
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