You are here: Home » Economy & Policy » News
Business Standard

India to renegotiate LNG rate with US, Russia

After successfully renegotiating with Qatar and Australia, India is now working on third and fourth contract

Press Trust of India  |  New Delhi 

Representative image Photo: Reuters
Representative image Photo: Reuters

After getting and to lower gas price, is seeking to renegotiate rate of LNG it has contracted from the US and to reflect current market realities, Chairman and MD B C Tripathi said on Wednesday.

"We have successfully renegotiated, along with Petronet LNG Ltd, two long-term (LNG import) contracts. We are now working on third and fourth contract," he said at a (Federation of Indian Chambers of Commerce and Industry) conference here.


While Tripathi did not name the contracts, he was referring to last month's in-principle agreement with Exxon Mobil Corp for a cut in price of 1.44 million tonnes a year liquefied natural gas (LNG) to be imported from Australia's Gorgon project.

In 2015, renegotiated price of the long-term deal to 7.5 million tonnes per year of LNG from Qatar, helping save Rs 8,000 crore.

"This is how market structure has changed," Tripathi said. "The point which I am trying to drive is that we are moving from a supply constraint market to a supply market."

Tripathi said market structure has changed from a time when Indian firms struggled to get an appointment with LNG to gas suppliers now running after the world's fastest-growing

This has primarily happened because availability has increased and have slumped in global energy markets.

Though he did not name the two other contracts for which GAIL, India's biggest gas distributor, is seeking price renegotiation, officials said he was referring to LNG contracted from the US and

wants to renegotiate the 2011 sales and purchase agreement (SPA) with Cheniere Energy for of 3.5 million tonnes of LNG annually, with yearly fixed fees of $548 million and a term of 20 years.

The state-owned firm had agreed to pay Cheniere a price of $3 per million British thermal unit (mmBtu) plus 115 per cent prevailing Henry Hub natural gas price.

Officials said wants the fixed portion to be lowered to bring down landed cost of LNG to around $7-8 per mmBtu as against the present $9.7.

LNG in the spot or current market is available for less than $6 per mmBtu.

The US supplies are scheduled to begin from the next year.

Besides the 3.5 million tonnes per annum of LNG from Houston-based Cheniere, has booked 2.3 million tonnes a year capacity at Dominion's Cove Point liquefaction facility.

Also, wants Russia's Gazprom to delay and lower the price of gas it has purchased under a 20-year deal.

Shipments under the deal, initially expected to start in 2018-19, are linked to crude oil

had in 2012 signed a deal with Gazprom to buy 2.5 million tonnes a year of LNG for 20 years from the Shtokman LNG export plant in the Barents Sea.

First Published: Wed, October 04 2017. 18:52 IST
RECOMMENDED FOR YOU