NEW DELHI: Natural gas prices was on Tuesday cut by about 8 per cent to $4.66 a unit to reflect the softening in international prices, a move that will lower electricity and fertilizer costs.

Oil Ministry's pricing cell, PPAC said domestically produced natural gas will cost $4.66 per million British thermal unit from April 1 to September 30 on gross clarofic value basis (GCV) as opposed to $5.05 per mmBtu currently.

On net clarofic value (NCV) basis, the rate would be $5.1726 or $5.18 as compared to $5.61 currently.

The new rates are as per the formula approved by the government in October last year.

This is the first reduction in price of natural gas in India. Domestic gas price was raised from $4.2 per mmBtu to $5.61 per mmBtu effective November 1.

While the cut will impact the revenue producers like Oil and Natural Gas Corp and Reliance Industries, it will bring gains for users in the power and fertilizer sector in form of lower feedstock cost.

As per mechanism approved in October 2014, price of domestically produced natural gas are to be revised every six month using weighted average or rates prevalent in gas-surplus economies of US/Mexico, Canada and Russia.

Indian gas price is calculated by taking weighted average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta (Canada) and Russia with a lag of one quarter. So, the rates for April 1 to September 30 are based on average price at the international hubs during January to December 2014.

"In accordance with Para 8 of the 'New Domestic Natural Gas Pricing Guidelines, 2014' issued by ministry of petroleum and natural gas, government of India, the price of domestic natural gas for the period April 1, 2015 to September 30, 2015 is given hereunder: $4.66 per mmBtu on GCV basis," PPAC said.

The current price of $5.61 per mmBtu is already among the lowest in Asia Pacific. China pays explorers $11.9 per mmBtu rate for new projects while Indonesia and the Philippines price the fuel at $11 and $10.5 respectively.

Gas from offshore fields in Myanmar, where Indian firms ONGC and GAIL have stake, are sold to China for $7.72. Thailand prices gas from new projects at $8.2 per mmBtu.

The only nations with lower rates are Vietnam ($5.2) and Malaysia ($5).