LNG prices may jump by 30% from next month

The price of imported LNG that state-run firms supply to power and fertilizer plants is likely to jump by about 30 per cent from the next month as the rates at which Qatar supplies the fuel may rise shortly. 

LNG from Petronet LNG's Dahej terminal in Gujarat that is used by customers such as Dabhol power plant, is likely to cost between $6.3-6.7 per million British thermal unit (mmBtu) as against the current rates of $4.98 per mmBtu, industry sources said.

This prices does not include charges for regassifying LNG into natural gas, sales tax, transportation charges and marketing margins.

The delivered price to a customer should be in the range of $8-8.5 per mmBtu as opposed to current $6-6.5 per mmBtu.

Petronet imports LNG from Qatar under to sets of contracts - one long term at cheaper rates and the other short term on spot prices. These two rates are pooled to make price affordable to users such as Dabhol.

Currently, the long-term LNG costs $2.53 per mmBtu ex-ship while short term LNG is priced at $8.5 per mmBtu. These two rates are pooled to arrive at $4.98 per mmtu price.

Sources said from January, the long term rates will rise to $3.12 per mmBtu while the short term LNG rates have been renegotiated at around $13 per mmBtu keeping crude at $60-70 a barrel range.

So, pooling these two rates give the new selling price, they said adding since the crude oil prices have fallen to $40 a barrel, the rates for short term contract that runs till September 2009 may be lowered.

Petronet is likely to indicate the final pooled price by the month end, sources added.