Revised Qatar LNG deal slashes gas price to below $5 per mmBtu

The revision in LNG agreement with Qatar has helped bring down cost of importing natural gas to less than USD 5 per mmBtu from USD 12, Oil Minister Dharmendra Pradhan said today.
In late-December last year, India got Qatar to agree to slashing gas price by half to match a slump in global energy rates, helping the nation save billions of dollars, as well as get waiver from Rs 12,000 crore liability for short-lifting of gas.
India, which got USD 15 billion of benefits during first 11 years of the term-contract with Qatar beginning 2003 by way of enjoying low gas prices when world energy rates were rising, is currently paying less than USD 5 per million British thermal unit for 7.5 million tonnes a year of LNG it buys from RasGas of Qatar.

"Earlier the prices during 2015 were in excess of USD 12 per mmBtu. The current price applicable under the contract works out to less than USD 5 per mmBtu based on prevailing crude prices," he said in a written reply to a question in the Lok Sabha.
This revision, applicable from January 1, has led to making LNG cheaper for the end consumers, he said.
The revised formula will base the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that PLL buys an additional 1 million tonnes of LNG annually.

Further, Petronet LNG Ltd - the firm that imported LNG from RasGas of Qatar - has executed agreement for additional supply of 1 million tonnes per annum of LNG for about 12 years with effect from January 1, 2016 at the prevailing market prices, he said.

Pradhan said Qatar will also not seek Rs 12,000 crore from PLL for 'under-lifting' LNG from RasGas by 38 per cent.
"RasGas and Petronet LNG Ltd agreed to rescheduled the LNG quantity not taken by Petronet LNG Ltd during 2015 to a future period and RasGas has agreed to waive the take or pay liability under the contract for the year 2015," he said.

Petronet, a joint venture of state-owned Indian Oil Corp, GAIL India Ltd, Oil and Natural Gas Corp (ONGC) and Bharat Petroleum Corp Ltd (BPCL), had started importing LNG - natural gas supercooled to liquid state for ease of transportation in ships - from 2004.